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Australian miners attack 'obsession' with tax

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(Globalpost/GlobalPost)

Australia's mining industry Wednesday attacked what it termed an "obsession" with taxing the booming sector, after revenues from the government's resources profits tax fell well below forecasts.

The Minerals Council of Australia, which represents the majority of the nation's miners, launched a new advertising campaign as a report revealed Rio Tinto and BHP Billiton had amassed a combined Aus$1.7 billion (US$1.76 billion) in credits which they could offset against the Minerals Resource Rent Tax.

"The new Minerals Resource Rent Tax must be kept in perspective," the council declared in an advertisement in major newspapers.

"It is a top-up tax on iron ore and coal if and when it is 'super-profitable'. It's separate from, and in addition to, the company tax and royalties the industry continues to pay.

"Enough is enough in relation to the obsession with increasing taxes on mining in Australia."

The council said the Australian mining industry paid its "fair share" of tax, forking out more than Aus$130 billion in taxes and royalties since 2000.

The powerful industry strenuously campaigned against the mining "super profits" tax when it was first announced in 2010, a controversial levy which helped end Kevin Rudd's prime ministership.

After Rudd was replaced by Prime Minister Julia Gillard, significant changes to the tax lowered the rate and narrowed its range to just iron ore and coal.

But six months after it was finally introduced, it has returned only Aus$126 million to the government, despite a forecast that it would bring in Aus$2 billion in its first full year.

The government said revenues have been hit by a fall in commodity prices but questions have arisen about the design of the tax.

The Sydney Morning Herald said iron ore miner Fortescue Metals would not pay the tax this year, while Rio and BHP had Aus$1.1 billion and Aus$637 million respectively in credits which could be used to offset any future mining tax liabilities.

Independent MP Andrew Wilkie said it appeared that Fortescue's Andrew Forrest was right when he argued there was a basic flaw in the tax relating to depreciation provisions which unfairly favoured the biggest miners.

"He was saying that BHP and Rio and Xstrata had so much invested in existing projects and mining leases that they would effectively pay no MRRT for many years. And he's been proven correctly right," Wilkie told the ABC.

mfc/mp/pj

http://www.globalpost.com/dispatch/news/afp/130212/australian-miners-attack-obsession-tax