Knowledge@ASB: Mining Super Profits Tax and Sovereign Risk

In their battle against the proposed resources super profits tax, global mining companies are claiming Australia has presented them with a potentially deal-breaking sovereign risk issue that threatens future investment decisions. The wider impact of the tax for foreign investors may be a residual uncertainty over future government actions. Offshore investors may be spooked by the arbitrary nature of the tax grab, but the link between the super profits tax and real sovereign risk is remote, says Peter Swan, an economist at the Australian School of Business, in an interview with Julian Lorkin for Knowledge@Australian School of Business. What's really needed is a rethink of the tax.