What has Australia done? If the outcry from oil and mining companies is to be believed, Prime Minister Kevin Rudd plans to ruin one of the best fiscal regimes in the world, threatening investments and revenues worth tens of billions of dollars. But the problem with this rush to judgment is that no one has a clear idea of what the government's proposed Resource Super Profits Tax (RSPT) will look like, or what impact it could have. The key to the plan is a 40% profits tax on all new resources projects, replacing state royalty schemes for onshore developments and the Petroleum Resource Rent Tax (PRRT) on offshore projects. Existing offshore projects can stay under the PRRT or opt in to the new plan. Less clear, however, is how the new tax will treat cost recovery, putting at risk the viability of some upstream developments.
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