The new tax announced yesterday will see a 40% levy on company profits and this news will not go down well in the mining sector. Shares like BHP and Rio Tinto will be heavily sold this morning. Even more importantly on a longer term time-frame will be the effect on mergers and acquisitions in the mining sector. Chinalco and the like will now have a longer think before they decide to buy Australian mining interests. Finally, if this news creates excessive volatility in Australian financial markets, the RBA may decide to pause. All together these factors will increase the downside risk for the Aussie.