PERTH (miningweekly.com) – The much-contested mineral resources rent tax (MRRT) kicked in this weekend, amid protest from Australia’s peak industry body.
The Minerals Council of Australia (MCA) has labelled the MRRT a top-up tax on existing company tax and royalties, saying that while workable, it was not necessary to achieve the government’s justification for another new tax, namely to spread the benefits of the mining boom.
“The minerals industry was paying its way under the tax arrangements that existed prior to the introduction of the MRRT, contributing more than A$20-billion to state and federal coffers in 2010/11. This is 500% more than at the start of the mining boom,” the MCA said.
The industry body noted that without the introduction of the MRRT or the carbon tax, the mining boom would add around A$250-billion to the federal budget between 2005 and 2015.
Federal Treasurer Wayne Swan said over the weekend that the MRRT would raise some A$13.4-billion to 2015/16, with the revenue raised to underpin tax reforms for small businesses and boost superannuation, as well as fund critical infrastructure investment.
“The mining boom has delivered huge benefits for Australia, super-charging mining-related sectors in particular, but also assisting businesses and the community more broadly, including through cheaper imported goods.
“However, the government recognises that the mining boom has also contributed to challenges for some sectors, like increased competition for labour and the high Australian dollar. The MRRT will enable the government to tackle some of the challenges of a patchwork economy by securing a more appropriate share of the value of Australia’s nonrenewable resource wealth,” Swan said.
The MRRT has faced heavy opposition from Australian miners, with iron-ore major Fortescue Metals recently announcing that it would challenge the tax before the Australian High Court.
Fortescue CEO Nev Power has said that the company was challenging the MRRT on the grounds that it discriminated between the states, curtailed state sovereignty and gave preference to one state over another.
“We believe we have a good case for challenging the MRRT on constitutional grounds, and we look forward to the resolution of these important issues by the High Court,” Power said last month.
Western Australian Premier Colin Barnett has previously said that he would support any High Court challenge to the MRRT, and would present the state government’s own legal findings into the constitutionality of the tax, should a case be made.
The MRRT will impose a 30% resources tax on iron-ore and coal profits exceeding A$50-million. Miners with assessable profits of less than A$75-million a year would also not be liable for MRRT.
Carbon tax bill rockets
Meanwhile, the MCA has also lamented the introduction of Australia’s A$23/t carbon tax, saying that the weekly carbon bill would be more than three-times greater than Europe’s, while the country emitted less than a quarter of Europe’s emissions.
Australia's carbon tax starts off generating A$77.3-million a week, the Council said, quoting new figures from the Centre for International Economics, which showed that Europe's emissions trading scheme, which covers 30 nations, had generated A$23-million a week so far in 2012.
The figures also showed that Australia’s carbon tax would generate A$127.1-million a week by 2013/14, and A$140.5-million a week by 2014/15.
“The design of the world's biggest carbon tax fails every test of its objective and of good public policy,” the MCA said.
“It will not materially reduce emissions nor improve Australia's carbon productivity. The carbon tax imposes costs on the minerals industry that none of Australia's resources competitors will face. These same costs also undermine the industry's capacity to introduce the low-emissions technologies needed to reduce emissions.”
The MCA warned that the carbon tax was designed to slow Australia’s economic growth, which meant that jobs and exports for future generations would be foregone.
“That’s the antithesis of economic reform,” it said.