Australia reveals new mining tax
Source: Agencies |
May 3, 2010, Monday
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Print Edition
Print Edition
AUSTRALIA'S government angered its booming resources sector yesterday by unveiling a new tax on mining projects from July 2012 under a sweeping pre-election tax overhaul which will also boost pension savings for workers.
The government will also cut the company tax rate from 30 percent to 29 percent from mid 2013 and to 28 percent by mid 2014, and will refund state-based royalties currently imposed on mining projects.
The new 40 percent Resource Super Profits Tax will hit big miners such as BHP Billiton,, Rio Tinto and Xstrata and is set to raise about A$12 billion (US$11 billion) in its first two years.
"If implemented, these proposals seriously threaten Australia's competitiveness, jeopardize future investments and will adversely impact the future wealth and standard of living of all Australians," said BHP Billiton chief executive Marius Kloppers.
He said the changes would increase the group's effective tax rate on Australian earnings to 57 percent from the current 43 percent.
Investment bank UBS predicted a sell-off of Australian mining stocks today as investors digested changes, which could also send a chill through mining mergers and acquisitions.
"I think it's clearly negative for the big miners. I expect them to be down fairly materially," said UBS chief strategist David Cassidy.
Treasurer Wayne Swan said the government expected strong opposition to its plan, from both the resources industry and conservative opposition, and would now consult miners on tax details.
"We are under no illusions about how difficult it will be to win support for this package," he said, adding support would never be unanimous.
Swan said the new tax would help all Australians share the benefits of a prolonged mining boom, fuelled by demand from China and India, which helped Australia avoid recession during the global financial crisis.
Australia faces elections in the second half of 2010, most likely in October, with Prime Minister Kevin Rudd ahead in opinion polls and seeking to win a second term in office.
Swan denied the new mining tax would discourage investment, and said governments had only received about A$9 billion extra from resource charges over the past 10 years, while resource profits were A$80 billion higher.
Conservative opposition leader Tony Abbott said he was strongly opposed to the new mining tax.
The government will also cut the company tax rate from 30 percent to 29 percent from mid 2013 and to 28 percent by mid 2014, and will refund state-based royalties currently imposed on mining projects.
The new 40 percent Resource Super Profits Tax will hit big miners such as BHP Billiton,, Rio Tinto and Xstrata and is set to raise about A$12 billion (US$11 billion) in its first two years.
"If implemented, these proposals seriously threaten Australia's competitiveness, jeopardize future investments and will adversely impact the future wealth and standard of living of all Australians," said BHP Billiton chief executive Marius Kloppers.
He said the changes would increase the group's effective tax rate on Australian earnings to 57 percent from the current 43 percent.
Investment bank UBS predicted a sell-off of Australian mining stocks today as investors digested changes, which could also send a chill through mining mergers and acquisitions.
"I think it's clearly negative for the big miners. I expect them to be down fairly materially," said UBS chief strategist David Cassidy.
Treasurer Wayne Swan said the government expected strong opposition to its plan, from both the resources industry and conservative opposition, and would now consult miners on tax details.
"We are under no illusions about how difficult it will be to win support for this package," he said, adding support would never be unanimous.
Swan said the new tax would help all Australians share the benefits of a prolonged mining boom, fuelled by demand from China and India, which helped Australia avoid recession during the global financial crisis.
Australia faces elections in the second half of 2010, most likely in October, with Prime Minister Kevin Rudd ahead in opinion polls and seeking to win a second term in office.
Swan denied the new mining tax would discourage investment, and said governments had only received about A$9 billion extra from resource charges over the past 10 years, while resource profits were A$80 billion higher.
Conservative opposition leader Tony Abbott said he was strongly opposed to the new mining tax.
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