Undermining the Resources Super Profits Tax 2013-152.1

In May 2010, Kevin Rudd’s Labor government announced plans to reconfigure taxation arrangements for mining companies involved in the extraction of non-renewable resources. Called the Resource Super Profits Tax (RSPT), profits over and above the normal rate of return on capital would be taxed at a rate of 40 percent. The remaining profit would still be subject to the company tax but at a rate of 28 percent instead of 30 percent. The government argued that the new regime would be fairer, allowing Australians to better share in the resources boom that had seen companies’ before-tax profits more than treble since 2005.

This case, designed to promote discussion about issues of strategic communication, also lends itself to a range of other teaching topics. The validity of the proposed tax was the subject of heated debate amongst experts.