Big miners must tell investors how the new resources tax will affect their profits: Kohler

Apparently we can cut the resource rent tax rate from 40 to 22.5%, more than double the profit threshold above which it cuts in and reduce the number of companies being taxed from 2,500 to 320, and only lose one-eighth of the money.

Julia Gillard really is a prime minister who Gets Things Done – the Mary Poppins of tax policy, and the deal is supercalifragilisticexpialidocious. Just don’t ask too many questions.

The problem is that we are talking about listed companies that have an obligation to keep the market informed, under laws passed by the government.

Yet shareholders are now being kept in the dark by what appears to be a conspiracy of misinformation between the Gillard government and BHP Billiton, Rio Tinto and Xstrata.

If those three companies and the other listed firms now subject to the minerals resource rent tax are allowed to trade on the ASX this morning, it would be a disgrace. Investors are now entirely in the dark about what the new tax means for the value of their shares.

Mind you, they were in the dark about the impact of the resource super profits tax as well, which would have been completely unacceptable had the loss of value been caused by anyone other than the government.

The difference is that the companies themselves were not involved in the RSPT, but Friday’s announcement of a new taxing regime was the result of negotiations with BHP, Rio and Xstrata.

So they have a clear obligation to inform shareholders what they agreed to. And don’t tell us you don’t know.

After several days of negotiations, those companies would know exactly how much they will now be paying under the MRRT and exactly how it will affect their profits. The only reason they would have refrained from detailing this on Friday, as they are supposed to do under ASX listing rules, is to allow the government to spin the deal as only costing $1.5 billion.

But how can you still raise $10.5 billion from a tax that is clearly a shadow of its former self and apparently makes the miners happy? Most of them will no longer be taxed at all and those that are subject to the MRRT will only pay slightly more.

I think Resources Minister Martin Ferguson might have let the answer slip in his interview yesterday with Barrie Cassidy on the ABC’s Insiders. He said: “I think the forward estimates we worked on are pretty solid because they represent an update in interprets (sic) of commodity prices.”

It looks like the government has raised its forecasts for commodity prices, just as the world appears to be tipping over into another recession. But as Martin Ferguson said yesterday: “When you think about it, iron ore’s gone up over 400% over the last decade, coal 200%. That’s why we actually confined it back to the three key commodities that are absolute high demand.”

In other words, it seems the government restricted the resources rent tax to iron ore, coal and energy not to let 2,180 companies off the hook, but to focus it on the most profitable commodities. At least that’s what the minister seems to be hinting at.

My colleague Robert Gottliebsen did some more digging into this over the weekend and came up with some fascinating answers along similar lines.

But while this sort of smoke and mirrors might be acceptable for political spin, it is completely unacceptable for listed companies.

This article first appeared on Business Spectator.