THE DAILY CHART: OECD's tempered MRRT tick

The OECD has thrown its support behind the federal government's mining tax, to a point. In its Economic Survey of Australia the Paris-based organisation said the mineral resource rent tax (MRRT) is "justified on both equity and efficiency grounds". On equity grounds, the OECD cites this graph illustrating that the government's share of mining profits has fallen from 40 per cent to around 13 per cent in the last decade. On efficiency grounds, the OECD agrees with the widely accepted premise that the current tax system on production is a disincentive for mining companies and a tax on profits would be more appropriate.

But the OECD takes issue with the current form of the MRRT. Firstly, the organisation is concerned that the government has set the tax too low, so the tax share of mining profits will remain lower than they should be. Secondly, applying the new regime to only a small fraction of mining companies undermines efforts to increase the efficiency of mining taxation – both concerns serve as timely reminders of what the original resource super profits tax looked like. And the OECD adds that the government shouldn't be making spending decisions on the basis of future mining tax revenue because of its unpredictability and diverting the proceeds to an investment fund would be more prudent.

For more on the MRRT, Rob Burgess points out that Treasurer Wayne Swan's push for China to let the yuan appreciate could put potential iron ore and coal exports at risk, which would inevitably result in lower mining tax revenue.