"Miners appear to be too big of a honey pot for governments to ignore. Should an investor ignore this large transfer of wealth happening in Australia as a blip, see it as a buying opportunity, or switch to futures where government theft is less of an issue?"

And

"I would appreciate your thoughts on the sudden change in Rio Tinto's equity value. I know WHY it happened, but want to know how you will view it in the near-to-mid term. Many thanks."

Eoin Treacy's view Thank you both for these interesting emails. The Australia Future Tax System's website was not functioning when I tried to access it earlier today, but it is probably worth a look when it's back online. This article by Ross Louthean for Mineweb.com may also be of interest. Here is a section:

Prime Minister Kevin Rudd and his Treasurer Wayne Swan utilised part of the Henry Report by Treasury head Ken Henry to show they want a redistribution of wealth - taking 40% of the profits of major miners to pay for lower company tax (from 30% to 28%), flatten personal tax rates to combine all family tax benefits into a single means-tested payment.

The reaction from miners and their lobbies has been swift, with warnings of sovereign risk, of projects stalling and miners looking to better taxation regimes overseas - notably in South America and parts of Africa.

The mining sector has been the punching bag in the past - it had to carry the full brunt of the native title movements in the past two decades, but it may not lose this battle.

Opposition Leader Tony Abbott will oppose this tax and that may mean facets of new taxation measures relating to a resource rental tax may stall in what could be an hostile Senate, despite the fact greens senators would support the government because it is robbing dastardly miners.

While the goodies being offered by Rudd and Swan will appeal to the public, the latest political polls are showing a significant erosion of Rudd's popularity - largely due to his big spending and some associated disasters, including a multi-billion dollar home insulation scheme that failed to meet safety requirements, and is costing $1 billion to remedy.

On Thursday, when I wrote about this subject in the abstract, I cautioned against rash moves aimed at the resources sector particularly at such an anxious time for markets. Australia is already one of the highest tax regions for miners and now looks set to get even more draconian. We would welcome research on the potential ramifications of these moves but here are some preliminary thoughts.

Companies generally attempt to pass on higher costs to their customers. In Australia's case, since iron-ore and coal make up such a high proportion of industrial resource exports, miners will attempt to pass on higher costs to China among others. How successful such a policy might be is questionable against a background of Chinese tightening and some margin compression appears likely. Higher taxes will also alter the economics of investment in the mining sector, which could favour M&A and brown field over green field development.

BHP Billiton fell below the 200-day moving average this week and in the process broke the progression of rising reaction lows. It needs to sustain a move back above A$40 to offset scope for some further downside.

Rio Tinto also broke below the 200-day moving average today and is testing the February low near A$66. It also needs to rally in sharp order if a further test of underlying trading is to be avoided.

Fortescue Metals had already pulled back to test the 200-day moving average by last week. It broke below it this week and is now testing the A$4 level. Technical damage has been done to the trend and the share needs to find support above or in the region of the October lows near A$3.50 if the medium-term bullish outlook is to be maintained.

BHP Billiton and Rio Tinto have been flattered by the weakness of the Pound and as a result have a little more room for manoeuvre relative to their respective progressions of rising lows when quoted in Pounds. Nevertheless, the additional burden of Australian taxes, on top of China's underperformance and general stock market anxiety indicates that these shares are not immune from the current selling pressure and need to find support relatively quickly if the consistency of their medium-term advances is to be sustained.