The investment community supports the resources super profits tax despite expecting it to negatively impact portfolios.
The investment community has contradictory views when it comes to the federal government's proposed 40 per cent super profits tax on mining companies, according to a survey conducted at fund manager Legg Mason's investment symposium yesterday.
Sixty per cent agreed with the concept of the tax, which the government has said it wants to use to boost the superannuation guarantee to 12 per cent and reduce business tax to benefit all Australians.
But when it came to investing, 81 per cent of respondents said they believed the tax would negatively impact portfolios as it would hurt profits of widely-held mining companies including BHP Billiton and Rio Tinto.
While Australian investors understood the tax's merit they still held concerns, Legg Mason Australian Equities chief investment officer Reece Birtles said.
"Investor concerns are around the very low return on investment hurdle for taxing super profits and the impact on Australia's sovereign risk rating and future investment given the retrospective nature of the change," he said.
The surveyed audience was made up of financial planners, fund managers, asset consultants, research analysts and other members of the investment community.
The tax has sparked controversy on all sides of the investment community and politics since it was introduced earlier this month.
BHP Billiton chief executive Marius Kloppers reportedly warned the company's 500,000 investors that their dividends may be slashed due to the tax.
Fortescue Metals chairman Herb Elliott said in a letter to shareholders that the tax may cost jobs and continue to negatively impact the iron ore producer's stock as it would "ultimately decimate future investments in new projects".
Treasurer Wayne Swan has dismissed the miners' arguments as a "very big fear campaign".
The two non-consecutive alphabetic letters encountered most often last week caused more controversy than the underlying policy they represented, Wouter Klijn writes.... read more »
Home delivered!
Daily news, weekday mornings
Get the day's news delivered direct to your inbox. Register here (it's free!) and choose 'yes' to receive the InvestorDaily newsletter.
