- Main Body
- Fiscal policy challenges emerging out of the recent mining boom in Australia
- Resource Rent Taxation and Negative externality
- Economic Framework of Non-Renewable
- Resource Taxation
- Economic Costs and Benefits of Mining Super
- Profit Tax
This paper aims to look at the causes for the new mining boom in Australia. Along with this, some monetary policy effects that have resulted from this are addressed in depth. It is seen that the profits made out of non-renewable resources should be invested in such a way that the future generations also get the benefits of it i.e., one form of assets are to be converted into another type of assets. The new super-profit tax is being studied in this sense. The analysis of costs and profits clearly demonstrates that the advantages outweigh the costs correlated with them. A personal point of view regarding this tax policy being a good fiscal measure is also incorporated. Both quantitative and secondary research is done to reach at a conclusion.
Mining boom in Australia is an outcome of huge demands for these resources in the global market, mainly Asia because of its growing need for these minerals. In all parts of Australia, mining companies are increasing their present operations, shuttered mines are being re-opened and all this is taking place at a never before pace. Moreover, this latest boom in this mining sector can also be attributed to the expansion in demand for Australian commodities by the foreign nations. This has culminated in an unprecedented increase in their terms of exchange, along with declining import costs. (Banks, 2011, p. 1) At first it was perceived by most of the Australians that the boom in their mining sector had bought unequivocal benefits to their nation’s economy by creating more jobs, generating higher revenues from exports, taxation and higher incomes for most of the people. But studies have revealed that some of these increased profits from the mining companies are at the cost of profits from the non mining institutes (Richardson, 2009, p. 2). In terms of mineral production, Australia is considered to be an inherently resource-rich country and one of the world’s leading nations. Australia, as already said, is a major exporter of mineral resources, exporting huge amounts to Asia and the Pacific regions. The Australian economy, during 2007 had grown at a rate of 3.9% owing to the increasing global demand for mineral commodities. Since, higher prices in world market for mineral commodities were expected in future as well, the Australian economy kept on expanding. As a consequence of an upgrade in the domestic demand for more workers and thinning labor market, in 2007, the consumer price index (CPI) rose by 4.2% (Australia Mineral and Mining Sector Investment and Business Guide, 2006, p. 45).