Tuesday, May 04, 2010

"Super Tax" Hits Australia; In US, Gold will be an Easy Target; Expatriates Give Up US Citizenship To Avoid Taxes

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 http://www.bloomberg.com/apps/news?pid= ... xeWizwN5Ao

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 http://www.businessweek.com/news/2010-0 ... ate4-.html

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,â€