Three classic public gripes are at the fore of a heated war of words between the Sydney Morning Herald, coal miner Glencore, and the Australian public, over how much tax the mining giant is (or isn’t) paying.
A producer and marketer of a variety of mined and agricultural commodities on the global scene, Glencore’s core business in Australia is coal mining. In fact, Glencore is the biggest miner and exporter of thermal coal in Australia, outstripping Rio Tinto and BHP Billiton in terms of volume.
The majority of the Australian public expects the nation’s bigger businesses to be ‘giving something back’ to the country, by way of taxation. So when Sydney Morning Herald business columnist Michael West last Friday published an article alleging that on $15bn of income over the last three years, Glencore’s Australian branch had paid next to no tax, it was no surprise that it sparked a public furore.
West’s almost 3000-word long article alleged that Glencore’s head honchos were, from the company’s head office in Baar, Switzerland, orchestrating an intricate scheme of internal loans, high-interest external borrowing and other morally questionable tactics, to avoid paying tax in Australia.
The article, titled ‘Glencore tax bill on $15b income: zip, zilch, zero’, blasted the miner for alleged “aggressive tax avoidance tactics,” and for treating “the payment of tax in Australia as an optional affair.”
That was enough, by itself, to kick off a heated discussion among SMH’s readership on the Fairfax paper’s website, and on social media and other channels.
But when Peter Freyberg, Glencore’s Australian coal chief, stepped in to defend his business, things really got fiery.
“In the past three years, Glencore paid $3.4 billion in taxes and royalties in Australia,” Freyberg wrote to Fairfax. “We comply with all tax rules and regulations here and in each jurisdiction where we operate.
The amount of tax our company pays is driven by the taxation legislation put in place by local, state and federal governments and is a matter of public policy.”
Freyberg also pointed to a number of channels outside of taxes and royalties, through which Glencore gives back to the country.
“We have operated [in Australia] for more than 15 years and employ 19,000 people across industries that include coal, copper, grain, nickel and zinc,” he wrote.
“In the past five years, Glencore’s coal business has invested heavily into sustaining, expanding and building coal mines in Australia. This additional $8 billion investment has created thousands of jobs and will serve Australia for decades.”
Freyberg’s argument was that (a) Glencore not only pays a fair amount of taxes and royalties (the inclusion of ‘royalties’ in that figure is a key point), and (b) the miner also gives back enough in other ways to render invalid any case against its contribution to the economy.
But the public – or at least the portion of the public represented by the letter-writing members of the Sydney Morning Herald’s readership – does not agree.
A series of letters from those readers, published subsequently by the paper, has centred on three classic public gripes, against the miner, the government, and the industry as a whole.
Gripe 1: ‘Big miners don’t pay enough taxes, and royalties don’t count’
A number of responses to Freyberg’s letter addressed his assertion that Glencore, in the past three years, has paid $3.4 billion in taxes and royalties – with the addition of royalties to the equation being particularly criticised.
“Royalty is not a taxation,” one reader wrote. “A royalty is a licence fee for a company to remove minerals or other, and is a payment for my asset as an Australian citizen.”
This distinction was reiterated by another reader, who argued: “Minerals belong to the crown. Royalties are essentially what mining companies pay to purchase the minerals from the crown. They are a business input cost and not a tax.”
A reader from North Nowra wrote: “Nice try, Peter Freyberg, but taxes and royalties are two quite different things and your attempt to deflect criticism by conveniently lumping them into a single amount won’t wash. Just how much of the $3.4 billion was tax, Peter?”
Readers wanted more from Freyberg, asking him to prove West wrong by going into more detail in terms of taxes paid by the mining giant.
“It should be pretty easy to show if Michael West was wrong in his article,” one wrote, while another: “Please may we know the breakdown of those ‘taxes’ and ‘royalties’ and what other Australian taxes were paid?”
Gripe 2: ‘The government needs to leave pensioners alone and target the big fish instead’
While it wasn’t directly alleged in West’s article that Glencore is doing anything explicitly illegal in Australia, a general consensus amongst respondents was that the government should do something to stop big miners sidestepping their ‘fair share’ of taxation. Instead, readers opined, the government is focusing too much on the little guy.
“It is easier and less messy for the federal government to target the low-hanging, vulnerable fruit of our society rather than tackle the likes of Glencore, Google, Facebook et al.,” said one reader.
“The government continues its quest to seek out the rorters among the aged, the sick, the unemployed and the disabled,” another wrote. “Pity it does not show the same enthusiasm for those rorting the tax system at the top end of the scale.”
One respondent thought the prime minister could gain some goodwill by going after the big miners with changes to tax law.
“We could even spend the filthy lucre on hospitals, education, etc.,” he wrote. “Government could be seen to be working for the people. A massive PR win would ensue. Does Mr Abbott know about this?”
Gripe 3: ‘Taxation isn’t the issue, coal mining’s impact on the environment is’
The third key point raised by the SMH’s letter writers was that regardless of how much tax coal miners are or aren’t paying, the focus needs to be placed more squarely on the environmental impact of their operations.
“It’s a worry when a coal mining company boasts that it supports the Australian economy, not by paying tax, but by building and operating new coal mines when we should instead be building and operating renewable energy sources,” said one reader.
“For some strange reason Peter Freyberg ignores the greenhouse gas emissions that will be produced from this old discredited means of energy production,” wrote another.
“The renewable energy business will produce just as many jobs and clean energy from a free non-extractive source, not just for decades but for ever. And Freyberg knows this along with the rest of us.”
Source from here