Australian Latest Mining Boom Essay Example | Topics and Well Written Essays - 2500 words

Australian Latest Mining Boom - Essay Example Both quantitative and secondary research is done to reach at a conclusion. Contents Topic Page Number 1) Introduction 3-4 2) Main Body a) Fiscal policy challenges emerging out 4-5 of the recent mining boom in Australia b) Resource Rent Taxation and Negative externality 5 c) Economic Framework of Non-Renewable 6 Resource Taxation d) Economic Costs and Benefits of Mining Super 6-8 Profit Tax e) Conclusion 9 f) Recommendations 9 g) Appendix 11 Introduction 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, coupled with decreasing import prices has resulted in an amazing enhancement in their terms of trade. (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). Australia is known to be an inherently resource rich nation and one of the leading countries in the world from the point of view of production of minerals. 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 result of an increase 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). With this boom came the need to review the ongoing tax system in the country. Under the Henry tax reviews the mining super profit tax was introduced which was instantly subjected to a lot of opposition from the mining community as well as the media. Here, in this report, the economic costs and benefits arising out of the mining super profit tax are analyzed and the discussion also includes some reasons as to why this tax is a good/bad policy measure. In this paper, both quantitative and qualitative research has been done. In order to analyze the costs and benefits of the super profit tax, vast literature in the form of journals, articles, books etc. have been reviewed. The proposals made by the gov ernment regarding the use of the revenues that would be generating out of this tax led to the cost-benefit analysis part. Quantitative analysis has been performed to see the amount of revenue that would have generated out of this tax, had it been implemented. Fiscal policy challenges emerging out of the recent mining boom in Australia In the upcoming years, with the increase in value of Australia’