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Mining taxes stacking up - report

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Photo by Bloomberg

22nd May 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Australia’s mining industry contributed a record A$63-billion to federal, state and territory governments in the form of company tax and royalty payments during 2021/22, new data by advisory firm Ernst & Young (EY) has shown

The report, commissioned by the Minerals Council of Australia (MCA), found that contributions from the mining sector in 2021/22 increased by A$21-billion from the previous year.

Royalties reached a decade high of A$24-billion in the period under review, a 42% increase from 2020/21, with EY estimating that net company tax for the mineral sector reached A$40-billion in the same period.

“Minerals have helped propel our economy forward, boosted economic opportunity and freedom, and enabled the governments to invest in the things that really matter: families, communities and vital services like hospitals, schools, childcare, aged care and infrastructure,” MCA CEO Tania Constable said on Monday.

“The minerals industry is clearly paying its fair share of tax. Over the 10 years to 2021/22, Australian minerals have contributed 21% of Australia’s gross domestic product (GDP) growth, A$295-billion in company tax and in royalties underpinning Australian government revenue year in, year out.

“The record tax and royalty payments come off the back of A$389-billion of capital investments the industry made since the start of the mining boom,” Constable said.

However, she warned of Australia’s vulnerability to competition for this investment from resources-rich economies which would only grow as they sought to seize the opportunity to supply the minerals and metals needed to achieve global net zero emissions.

“Investment should be placed at the centre of government’s policymaking to attract a significant proportion of this investment that will create tens of thousands of new regional jobs and business growth.

“Workplace relations, tax, environment, climate change and energy policies that impose unexpected costs on the mining industry threaten the capital investment that underpins its contribution to the economy and the global efforts to decarbonise,” Constable said.

The EY report estimates that in 2022/23, resource and energy export earnings are estimated to reach A$464-billion, up 10% from 2021/22, before easing owing to slower growth in some of Australia’s major trading partners. Export earnings from iron-ore are projected to decline following moderating prices over the forecast period. Metallurgical coal export earnings are expected to peak in 2021/22 at A$72-billion, although falling prices are to be offset by increases in Australian production. Thermal coal prices are expected to remain elevated owing to global factors, however, in future Australian exports of thermal coal are likely to decline from 2022/23 levels, meaning that export earnings will remain flat.

Edited by Creamer Media Reporter

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