Resource tax: sound and fury, signifying an election

From the amount of fuss being made about it, some people might conclude that the Labor government’s Resource Super Profits Tax proposes important changes in the tax system. Such a conclusion would, however, be a mistake. The RSPT has more to do with the approaching federal election than it does with taxation.

The government’s paper on the RSPT points out that it is part of a “tax reform package” that is “broadly revenue-neutral”. That is, what the Labor government proposes to take from the capitalist class with one hand, it will give with the other. Labor government rhetoric is intended to suggest that the RSPT will take a little of the vast wealth of the mining companies and share it with “all Australians” (who will therefore vote Labor). But that rhetoric has nothing to do with the reality.

The Australian economy has been buoyed by a natural resources boom, particularly for the past decade. This has of course benefited first of all the capitalists who own those resources. The RSPT would share some of the resources profits with the rest of the Australian capitalist class by funding a reduction in company tax and contracts for the construction of roads, railways and port facilities, particularly for new mining projects.

The howls coming from the mining company bosses are not entirely feigned. Capitalists are greedy by nature, and they don’t like sharing their wealth with anyone, not even other members of their own class. But the claims that the tax will cause them to cut mining investments are nonsense. Ten years ago, the effective tax rate on resource “super profits”, defined in the same way as in the RSPT, was 34%. (The current rate, by the government’s calculations, is 14%.) That didn’t cause an investment strike; quite the contrary. The nominal 40% rate of the new tax, once various rebates and concessions are factored in, will reduce to a real rate certainly no higher, and probably much lower, than the rate a decade ago.

What will working-class people get from the RSPT, or at least from Labor’s “tax reform package”? At a maximum — this is all the ALP is promising — a very gradual increase of employers’ superannuation contributions to 12% and a few other minor improvements in super. It is absolutely certain that employers will use the super increase as an argument for why wages should not increase, and that 99% of all ACTU officials will not fight on the issue.

Furthermore, there is no guarantee of even those minimal improvements. According to the government: “A Final Design Paper will be published in late 2010 and be made available for comment. This will set out, in detail, the design of the RSPT and form the basis for the legislation. In other words, we won’t know what is in the legislation until the election is past. Then Labor — if re-elected — will go into back-room negotiations, take out anything that really upsets anyone with money and give any left-over small change to working people. Remember: these are the same people who promised to “tear up” Work Choices, and then did little more than change its name.

Why, then, do some (not a lot) of non-mining capitalists object to the RSPT? Probably, they don’t like anyone raising the idea that some profits are “super” — that is, not rational, illegitimate because of their size. From the standpoint of capitalists, profits should always be increasing, and they don’t like any suggestion to the contrary.

Secondly, even the government’s timid rhetoric about “all Australians” having at least a tiny share in resources wealth may be a bit too much for some capitalists. There’s no telling where such ideas might lead: some people might decide that, if sharing resources wealth is a good idea, sharing all the wealth would be an even better one. Capitalists, being a tiny minority of the population, have to be constantly on guard against good ideas, even when they are only hinted at by politicians who don’t mean them seriously.

The dispute about the RSPT, to the limited extent it is real, is merely a disagreement among thieves about how to split up what they steal from the rest of us, complicated by the ALP’s effort to find an issue on which it can pretend to be progressive. The only real way to share resources wealth would be to nationalise the resources and use them for the common good, not for the benefit of a few billionaires. That’s not going to be done by any government the serves the present system.