Plans for a 40% tax on profits from mineral resources announced by the Australian government have been greeted with dismay by the mining industry.
According to the centre-left Labor government led by prime minister Kevin Rudd, the 40% resource super profits tax, announced as part of long-term tax reforms, will ensure Australians get a "fair share" from the country's resources. Estimated to raise A$700 million ($630 million) in 2012-2013 and over A$5.6 billion ($5.0 billion) over the next decade, the government says that it will be a better way of taxing resources because it "only taxes profits and fully recognises the large investments made in resource projects."
The Australian mining industry begs to differ. Industry body the Minerals Council of Australia described the tax as a "revenue grab not taxation reform." Pointing to the A$25 billion ($22 billion) paid in tax by mineral companies and workers in 2008-2009, and the 18% of the country's corporate income tax paid by the sector, Minerals Council of Australia CEO Mitch Hooke said in a statement: "The minerals industry is not under-taxed ... We are already punching above our weight in terms of tax take."
Rio Tinto, owner of Energy Resources of Australia which operates the Ranger uranium mine, issued a statement voicing its concerns about the new tax, warning that it could erode Australia's competitiveness, severely curtail investment and limit jobs growth. Meanwhile, BHP Billiton, owner of the Olympic Dam uranium and copper mine, expressed its disappointment at the plan. According to BHP, the new tax would result in an increase in the total effective tax rate on the profits from its Australian operations from a current level of around 43% to around 57% from 2013.
BHP Billiton CEO Marius Kloppers warned that the reforms could pose a threat to future investments in the country. "The stability and competitiveness of the tax system have been central to the investment in resources in Australia. If implemented, these proposals seriously threaten Australia's competitiveness, jeopardise future investments and will adversely impact the future wealth and standard of living of all Australians," he said.
The government's proposals are as yet recommendations rather than policy, and the leader of Australia's opposition, Tony Abbot, has confirmed that the opposition will oppose it. A joint press release from the opposition, a coalition of centre-right parties, described the new tax as "an act of economic vandalism that will have dire consequences for Australia's most successful industry sector, with significant flow-on effects right across the economy."
The new super tax is currently scheduled to be introduced from 1 July 2012, and the government says it is providing "multiple opportunities for engagement and consultation with industry." After an initial public consultation process, an Issues Paper will be released for comment in late July 2010, and stakeholders will have until the end of August 2010 to make formal submissions to the government. A final design paper and draft legislation will then be released for further consultation before the final legislation is introduced to parliament.
Researched and written
by World Nuclear News