Australia retreats from 40% mining tax
Source: Agencies |
July 3, 2010, Saturday
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Print Edition
Print Edition
Australia yesterday retreated from a planned 40 percent tax on booming profits in the mining industry, defusing a damaging row with big business and clearing the way for national elections to be called at any time.
Mining firms had campaigned against the proposed tax, and it was a key factor in the sudden ouster of Kevin Rudd as prime minister after he refused to negotiate. Yesterday's announcement from new Prime Minister Julia Gillard effectively removes the issue from the political agenda.
Opinion polls showed an immediate boost for the ruling Labor Party when Gillard took office, and she may choose to capitalize on that popularity by calling elections as soon as this weekend that could be held in August. Elections must be called by year's end.
"The breakthrough agreement keeps faith with our central goal from day one: to deliver a better return for the Australian people for the resources they own and which can only be dug up once," Gillard said.
The new deal replaces a so-called "super profits tax" of 40 percent with a profits-based minerals resource rent tax of 30 percent. The new plan shaves A$1.5 billion (US$1.27 billion) in extra tax revenue off the original plan, to about A$10.5 billion from about A$12 billion.
The new tax will apply only to the 320 biggest miners, down from the 2,500 that were under the original tax proposal.
It will apply only to iron ore and coal -- Australia's biggest exports -- while exempting metals that generally reap lower profits, such as nickel, gold, copper and uranium.
The regime, which will replace a state-by-state royalty system, is due to start in 2012 if Parliament passes enabling legislation.
Mining firms had campaigned against the proposed tax, and it was a key factor in the sudden ouster of Kevin Rudd as prime minister after he refused to negotiate. Yesterday's announcement from new Prime Minister Julia Gillard effectively removes the issue from the political agenda.
Opinion polls showed an immediate boost for the ruling Labor Party when Gillard took office, and she may choose to capitalize on that popularity by calling elections as soon as this weekend that could be held in August. Elections must be called by year's end.
"The breakthrough agreement keeps faith with our central goal from day one: to deliver a better return for the Australian people for the resources they own and which can only be dug up once," Gillard said.
The new deal replaces a so-called "super profits tax" of 40 percent with a profits-based minerals resource rent tax of 30 percent. The new plan shaves A$1.5 billion (US$1.27 billion) in extra tax revenue off the original plan, to about A$10.5 billion from about A$12 billion.
The new tax will apply only to the 320 biggest miners, down from the 2,500 that were under the original tax proposal.
It will apply only to iron ore and coal -- Australia's biggest exports -- while exempting metals that generally reap lower profits, such as nickel, gold, copper and uranium.
The regime, which will replace a state-by-state royalty system, is due to start in 2012 if Parliament passes enabling legislation.
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