Mining tax review a hard sell for govt
THE Federal Government is on a collision course with the states over mining royalties and may struggle to secure Green votes to get its resources tax through parliament. Laws to implement the tax will be introduced to parliament later this year, with the tax due to begin in July 2012.
Treasurer Wayne Swan announced yesterday all 98 recommendations of the Argus review of the Mineral Resources Rent Tax ( MRRT) had been accepted. The government will now credit mining companies the full amount they pay in stateimposed royalties.
This will slash the level of funds the government reaps from the MRRT – predicted to be $ 7.4 billion in the first two years – if states increase their royalties.
While the government won’t legislate to cap the states’ royalties, Mr Swan indicated there was a range of mechanisms to prevent any hikes, including possible changes to GST payments.
‘‘ I don’t anticipate as we go through this any great kerfuffle,’’ he told reporters.
‘‘ So I’m not telegraphing any particular measure that we would take.’’
Prime Minister Julia Gillard struck an agreement on the mining tax with mining giants BHP Billiton, Rio Tinto and Xstrata last year soon after she replaced Kevin Rudd.
The new tax applies to coal and iron ore miners.
The real test for the Government will be to garner the support of the Greens and key i ndependents, whose support is vital for the legislation to pass.
Mr Swan urged the Opposition, the Greens and inde- pendents to back the tax or pay the price in their electorates.
‘‘ Think about this, the mining industry, as represented by the great bulk of those that are mining our mineral wealth, have agreed with the Australian government that this is a tax that’s worth paying,’’ he said.
Greens leader Bob Brown, whose party will hold the balance of power in the Senate from July, said fully crediting mining companies with state royalties into the future allowed big miners to get off scot-free.
‘ ‘ Compared with Treasury’s original advice, Australian taxpayers are going to miss out on more than $ 100 billion worth of education, health services and infras t r ucture s pending,’’ Mr Brown said.
‘‘ We may end up with the federal taxpayer subsidising the states.’’
The tax would channel $ 6 billion of infrastructure spending to the regions nationally. Western Australia and Queensland stand to get at least $ 2 billion each for road, rail, port and other critical infrastructure.