In Australia, Labor government hopes of a windfall from a new resources tax have suddenly proven ephemeral in the wake of a sharp plunge in iron ore prices and coal prices, the two commodities targeted by the super tax.

In PNG, which basically relies on half a dozen significant mining operations, the concerns are much more basic.

The government has acknowledged that this year's budget will suffer a 500 million kina shortfall (out of a K10 billion budget) because of falling mineral commodity prices.

Both countries have been beneficiaries of a major resources boom from 2005 to 2011, except for a brief period in late 2008 during the global financial crisis.

The resources boom and greatly improved terms of trade delivered billions in additional taxes.

Commodity prices now appear headed to greater normality, in a historical sense.

At this stage no one is certain how much lower commodity prices might fall and how long these conditions will last.

The economic mess in Europe is taken as a given.

Countries like Greece and Spain and possibly some others have no stomach for tough austerity measures that can speed up a turnaround, making it unlikely most members of the European Union can anticipate a worthwhile recovery in the foreseeable future.

The US, which until the GFC was a key engine of growth for the world economy, is spluttering along.

There seems to be a clear dichotomy between much of its private sector, which remains in good shape except possibly for manufacturing generally and the overall macroeconomic picture, particularly the heavily indebted US government.

The real dampener on the resource sectors of Australia and PNG comes from the slowing down and increasing uncertainty of the Chinese juggernaut.

The ramifications of China's economic slowdown, as viewed from the perspective of its steel sector, provide clues as to the complexity of the challenge.

This ranges from the highly efficient steel producers like Baosteel and Wuhan Iron and Steel to a multitude of inefficient operations - an overhang of excess domestic capacity and significant reliance on domestic iron ore that is more expensive than imported supplies.

But that is another story.

The reality of lower export prices for Australia is that the much-touted Minerals Resource Rent Tax, which singles out iron ore and coal, will now bring into Canberra's coffers a tax reduction currently assessed at more than $A10 billion.

PNG, for its part, is not contemplating any new tax but the lower prices, particularly for copper, are expected to shave off more than K500 million from the 2012 budget.

What seems a bit uncertain at this stage is how much the raid on Treasury coffers for the just-concluded PNG national elections and other unbudgeted expenses might impact on the budget outcome.

In light of what is happening in Australia and the rest of the resources world it is interesting that some consideration is being given on ways to harness increased taxes from the half dozen mines that operate in the country, not all of which are taxpayers.

On paper this may seem a sensible idea since the resources sector, primarily the almost three-decades-old Ok Tedi mine, has been contributing billions in additional taxes since 2005.

These have been the subject of PNG's supplementary budgets.

There has been much debate in recent times about tax holidays for resources projects.

In fact this has only applied to two projects in the resources arena - the Napa Napa oil refinery set up by InterOil in Port Moresby and the Ramu nickel project.

In each, a strong case could be mounted for the tax holiday.

The Ramu project, being commissioned by China Metallurgical Corporation, has a 10-year tax holiday. Like Ok Tedi and Lihir, this project, despite relatively high world commodity prices, is unlikely to have been in a position to pay corporate tax within a 10-year timeframe even if a tax holiday did not exist.

Among the major proponents of additional tax on resources are the International Monetary Fund and the Asian Development Bank.

Both have an impeccable sense of timing, suggesting further imposts just when the rest of the world is pondering how much lower mineral prices - and resource tax collections - may fall.

The IMF advice, contained in its PNG Article IV Consultation report issued in May this year, said: "Preliminary findings by staff suggest that the average effective tax take in the resource sector corresponds to the low side of fiscal regimes in the world."

Such advice may have made sense in the period just prior to the GFC in 2008 but even then or especially today, to state that PNG's tax take on the resources sector is on the low side of fiscal regimes is a fallacy.

For a start PNG's tax rate is similar to Australia, where miners generally can access a whole range of government services that are unimaginable in PNG.

Secondly, the comprehensive annual reviews of the mining industry by Canada's highly reputable Fraser Institute clearly show PNG does not belong below the halfway cut-off point in terms of taxes paid by mining companies around the world.

In 2001, when PNG's mining industry seemed in its dying throes, the ADB was asked to look at corporate taxes and other issues to see whether some initiatives could help breathe new life into exploration and development activities.

Its eventual report suggested the existing tax rate was already competitive enough.

True to form, the sector continued its downward slide until the incoming government the following year introduced new incentives.

One of the key changes involved the scrapping of the additional profits tax that had been introduced in 1974 because of windfall earnings by Bougainville Copper, then the only mining operation in the country.

The APT, which the IMF is eager to see introduced for all mining projects, was a dismal failure from many points of view.

It acted as a deterrent to investment for many years and nevertheless was only payable on two occasions in its long history.

The IMF experts also suggested that significant tax revenues from the PNG LNG project were not expected before 2021-22, "largely owing to accelerated depreciation allowances".

Again these experts are likely to be proven wrong on both counts.

From day one of project implementation there has been an expectation that significant taxes will flow from 2018 onwards, even assuming that the two-tiered APT does not kick in by then.

It is possible taxes may peak around 2021 but this would only be because project debt is likely to have been paid off by then.

*Wantok was a regular weekly columnist for PNGIndustryNews.net in 2008. His return is finalised so expect his stories every Monday.