Australian protesters rally against the government's mining tax.
Australian protesters rally against the government's mining tax. - 
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Steve Chiotakis: Plans for a massive tax on mining profits in Australia have been scaled back. The proposal was so controversial, it actually helped give the prime minister there the boot. And the compromise today is moving markets in Europe right now, that's where we find Marketplace's Stephen Beard, he's live with us from London. Hi Stephen.

Stephen Beard: Hello, Steve.

Chiotakis: Tell us about this "massive" tax.

Beard: This was an additional 40 percent tax on mining company profits proposed by the former, prime minister, Kevin Rudd. Now mining is one of Australia's biggest, most buoyant industries; the country's often described as the quarry of the world, and especially of China. It's so profitable in Australia that it helped the country sail through the global crisis without slipping into recession. So this 40 percent levy looked at the time like a perfect tax.

Chiotakis: And if it was so perfect, Stephen, what happened?

Beard: Well, the mining companies didn't like it. They reacted with fury. They threatened to pull out of Australia some of their operations. They mounted a really rigorous TV ad campaign and the prime minister came off worse. His popularity slumped and he was ousted last week. Justin Urquart-Stewart of London fund manager Seven Investment says the prime minister seriously miscalculated:

Justin Urquart-Stewart: The Australian's look at the mining companies as their big success, their big global success, so they are rather proud of them.

And they're nervous about damaging one of their main sources of income and employment. The mining companies have said that the old tax proposal would have turned Australia into the most expensive country in the world for them to operate in. Under the new, much reduced plan, some but not all of the companies will be paying a bit more than they were before.

Chiotakis: Marketplace's Stephen Beard, reporting live for us this morning. Stephen, thanks.

Beard: OK, Steve.