PERTH (miningweekly.com) – Iron-ore producer Brockman Resources has joined a chorus of miners raising concern over Australia’s proposed super profits tax (SPT).

MD Wayne Richards said in a letter to shareholders that he believed the federal government should abandon the proposed SPT, and enter into a consultation process to design an “appropriate” taxing regime that would not put the Australian economy and the mining sector at risk.

“I do not support the SPT and believe it is not in the best interest of Australians either short term or long term,” Richards said.

He noted the market capitalisation of several Australia-focused mining companies in the small-to-midcap range had dropped by between 20% and 30%, since the announcement of a 40% tax on resources profits.

“This has affected the welfares of loyal and astute investors and their superannuation funds considerably, and will affect the long-term sovereign risk rating of Australia,” Richards said.

He added that the current uncertainty with the proposed tax was likely to delay mining projects, and as such, this “poorly conceived tax” was already impacting on the future strength of the Australian economy.

“Australia will become the highest taxed mineral resource country in the world, with an average tax on profits of between 57% and 58%. In addition, the SPT does not provide franking credit relief for dividends paid to Australian investors. This could ultimately lead to the reintroduction of a double taxation on the profits of the mining industry, reversing one of the economic reforms that have contributed to the strength of the Australian economy.”

Richards said that a properly designed resources rent tax could be considered a logical and effective tax process to implement, provided that it was structured fairly.

“Any tax reform must be based on sound economic principles and must not disadvantage the Australian resources industry, compared with other countries, and must not destroy the incentive to invest in new projects.”

Brockman has urged its shareholders to contact their federal Members of Parliament, and to urge the government to reconsider the “flawed” new tax, which Richards said threatened the future wellbeing and economic growth of Australia.

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