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Congratulations
(of sorts) go to Australia for enacting the highest taxes on mining profits
in the world. Please consider BHP, Rio Shares
Drop on Australian Mine ‘Super’ Tax
BHP
Billiton Ltd. and Rio Tinto Group, led declines in mining stocks in Sydney
trading on concern Australia’s plans to impose the world’s
heaviest tax regime on resource companies will cut billions from profits.
BHP and Rio fell the most in 3 months after Australia announced the so-called
super tax yesterday. The 40 percent tax on resource profits will start from
2012 and raise A$12 billion ($11 billion) in its first two years. BHP, with
51 percent of its assets in Australia, said taxes on its operations there
will increase to 57 percent in 2013 from 43 percent now.
Australia, the world’s biggest iron ore and coal exporter, is now the
most highly taxed mining nation, reducing its competitiveness, Citigroup Inc.
said. The move may reduce BHP’s earnings by 17 percent and Rio’s
by 21 percent in 2013, UBS AG said today in a report.
Taxing resources companies to help fund government spending is designed to
give Australia’s 20 million population a greater share in a
China-fueled boom for iron ore and coal. Prime Minister Kevin Rudd, preparing
for an election within a year, said the changes will help the government pay
for hospitals, retirement benefits and company tax reductions.
Mergers
and Acquisitions Will Stall
Bloomberg reports ‘Super
Tax’ May Stall Mining M&A
BHP
Billiton Ltd. and Xstrata Plc’s expansion and acquisitions plans may
stall on Australia’s plan to increase taxes on mining companies whose
profits have surged A$80 billion ($74 billion) in the past decade.
“Any probability of mining takeovers proceeding has lessened,”
Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd.
in Melbourne, including BHP and Rio Tinto Group, the world’s largest
and third-biggest miners, said on Bloomberg TV. “It definitely
increases the hurdles for prospective buyers in the resources space in
Australia.”
“I know from direct involvement we have as a firm there are a number of
major transactions on the cusp of being announced that they are going back
and rerunning their numbers now,” said Mike Elliot, global mining and
metals leader at Ernst & Young in Sydney. “Not necessarily with a
view that this has killed any of those deals, but it does change the balance
within those deals.”
In
US, Gold will be an Easy Target
It will not be long before the US considers doing the same thing to its
natural resources industry. Indeed, anything that makes money, especially
gold and energy will be easy targets.
For several years running I have been asked at precious metals conferences
about the possibility that government will confiscate gold as did FDR. My
response has always been "Physical confiscation will never happen again
. However, they may tax the hell out of it."
That possibility looks increasingly likely, and the end result is essentially
the same.
Giving Up Citizenship to Avoid the Taxman
Inquiring minds are reading More American
Expatriates Give Up Citizenship
Amid
mounting frustration over taxation and banking problems, small but growing
numbers of overseas Americans are taking the weighty step of renouncing their
citizenship.
“What we have seen is a substantial change in mentality among the
overseas community in the past two years,” said Jackie Bugnion,
director of American Citizens Abroad, an advocacy group based in Geneva.
“Before, no one would dare mention to other Americans that they were
even thinking of renouncing their U.S. nationality. Now, it is an openly
discussed issue.”
The Federal Register, the government publication that records such decisions,
shows that 502 expatriates gave up their U.S. citizenship or permanent
residency status in the last quarter of 2009. That is a tiny portion of the
5.2 million Americans estimated by the State Department to be living abroad.
Still, 502 was the largest quarterly figure in years, more than twice the
total for all of 2008, and it looms larger, given how agonizing the decision
can be. There were 235 renunciations in 2008 and 743 last year. Waiting
periods to meet with consular officers to formalize renunciations have grown.
Stringent new banking regulations — aimed both at curbing tax evasion
and, under the Patriot Act, preventing money from flowing to terrorist groups
— have inadvertently made it harder for some expats to keep bank
accounts in the United States and in some cases abroad.
Some U.S.-based banks have closed expats’ accounts because of
difficulty in certifying that the holders still maintain U.S. addresses, as
required by a Patriot Act provision.
“It seems the new anti-terrorist rules are having unintended
effects,” Daniel Flynn, who lives in Belgium, wrote in a letter quoted
by the Americans Abroad Caucus in the U.S. Congress in correspondence with
the Treasury Department.
Mish
GlobalEconomicAnalysis.blogspot.com
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