JOHANNESBURG (miningweekly.com) – The mining capital expenditure (capex) data released by the Australian Bureau of Statistics on Thursday, which shows a 16% decrease in the June quarter, underlines the “folly” of the National Party of Western Australia’s proposal for a A$7.2-billion tax on the country’s major iron-ore producers, the Minerals Council of Australia (MCA) said on Thursday.

MCA CEO Brendan Pearson said Brendan Grylls’ iron-ore tax proposal, announced after his appointment as leader of the state’s National Party last month, would make Western Australia the highest taxing iron-ore province in the world.

“Massive new taxes on Western Australia’s most important industry will reduce jobs, not create them. A huge new tax burden will deter investment, not encourage it,” he said in a statement, adding that, if implemented, the tax would hurt small businesses and freeze investment.

The National Party – the smaller party in the ruling coalition in the state – believes that Western Australia and taxpayers have facilitated the expansion of the iron-ore industry at “great cost”, and charge that big miners have not paid their fair share.

Pearson pointed out that in 2014/15, Rio Tinto and BHP Billiton had contributed A$3.2-billion in royalties to the government and a further A$259-billion in other state government taxes. Iron-ore royalties to the state government have doubled since 2009/10, from A$1.5-billion to an estimated A$3.6-billion in 2015/16.

He also said that the two mining companies had bought about A$80-billion worth of goods and services from local businesses in the five years to 2015/16, while infrastructure investments for towns and communities amounted to A$2.7-billion.

“A new mining tax directly threatens the substantial benefits that the iron-ore industry delivers for all Western Australians.”

Rio Tinto and BHP Billiton have said that they would oppose a new tax, with Rio Tinto describing the proposal as an “ill-conceived tax grab”.