Mining companies approve mining tax repeal
Repeal of Australia’s mining tax has been roundly applauded by mining industry groups but the nation’s peak business lobby has expressed concern that much of the spending attached to the tax remains in place.
The mining tax was supposed to help fund a raft of spending proposals when it was first proposed, from infrastructure developments through to business tax cuts and a boost in superannuation contributions.
But with its repeal imminent after a change of government and a Senate vote on Tuesday, Business Council chief executive Jennifer Westacott said much of the spending attached to the tax was still in place.
“It is disappointing that some of the provisions in the legislation still act as a burden on Australia’s already unsustainable medium-term fiscal position,” she said.
Ms Westacott did not clarify which provisions she was referring to, but it was noted on Tuesday that a bonus paid to families with children at school will be retained, although it will now be available only to families earning less than $100,000 a year.
Other bonuses for low income people will also be maintained temporarily but plans to boost superannuation payments have been delayed by at least six years under a deal struck by the Abbott government and representatives of the Palmer United Party.
“The whole process around the MRRT underscores the need for tax reform to be undertaken properly, rather than through ad hoc measures, and with the clear goals of ensuring governments have sufficient revenue for the future while creating an environment that supports jobs and investment,” Ms Westacott said.
Apart from the spending issue, Ms Westacott was largely supportive of the repeal, saying it would remove a weight from Australia’s economic competitiveness.
“This tax, and the process by which the former government brought it in, has acted as a disincentive to invest in Australia’s minerals sector at a time when the industry is facing pressing challenges to improve productivity and cost competitiveness,” she said.
“Repealing the MRRT will help improve Australia’s reputation as an attractive investment destination and ensure a strong, growing resources industry into the future.”
The tax was highly complicated and focused on iron ore and coal miners of a certain profitability level but the inclusion of rules that allowed miners to use prior capital spending as a tax deduction ensured few made payments.
BHP paid $200 million in mining tax in the 2013 financial year and $24.8 million in the 2014 financial year, but it is believed all payments by Rio Tinto were refunded by the tax office.
While some initial instalment payments by other companies may have been made, it is estimated that no other companies ultimately paid the tax.
The miners argue they already pay billions to the Australian tax office under other taxes and that the mere effort of complying with mining tax cost hundreds of millions of dollars.
Minerals Council boss Brendan Pearson congratulated the Senate for being able to find common ground.
“In just four sitting weeks, the new Senate has repealed the carbon and mining taxes thus demonstrating that with policy intent and goodwill the Australian Parliament can remove the blockages to stronger and more durable economic growth,” he said.
Rio Tinto chief executive Sam Walsh said he strongly supported repeal of the tax.
“This will be a positive step for investment and good for jobs in the mining sector,” he said.
“The MRRT was never necessary as Australians were already sharing in the benefits of the mining boom through the high company tax payments, royalties and community spending.”
Fortescue Metals Group chief executive Nev Power said the repeal would encourage Fortescue to continue contributing to Australian society in other ways.
“The repeal of the MRRT is a sign that Australia is open for business and serious about encouraging mining development and investment,” he said.