MCA rejects calls for resources super tax

Australia needs more investment, not taxes, the Minerals Council of Australia (MCA) has warned.

MCA chief executive officer Tania Constable was responding to a keynote speech at the Australia Institute’s Revenue Summit, where former Australian Competition and Consumer Commission chair Rod Sims called for a super profits tax on resources companies to be reintroduced, declaring the country had already raised corporate or personal taxes as high as it could.

Constable said that at a time when there was pressure on the federal budget, mining is making a significant contribution to government revenues and the broader economy.

“The return to the community from Australia’s mining industry has again hit record levels with a combined $43.2 billion in company tax and royalties paid in financial year 2020-21, a 16 per cent increase from the $37.3b contributed in the previous period,” she said.

“Company taxes paid reached a new record high of $26.5b and royalties also reached a high of $16.7b in 2020-21 contributing significantly to federal, state and territory governments at a time when they needed it most during the COVID pandemic.”

Constable said Australia needed to attract more investment in exploration, mining, minerals processing and mining-related manufacturing if the economy was going to benefit from growing global demand for minerals and metals.

“There is strong competition for this investment from other mining countries,” she said.

“Calls for extra taxes on mining profits disregard the fact that mining investment is highly uncertain and subject to periods of high and low revenues over a mine’s life.

“The effective tax rate on Australian mining investment is already high relative to many mining jurisdictions in other countries.

“Rather than proposing piecemeal changes to taxes based on short term conditions that will lead to perverse outcomes, Australia needs comprehensive reform of the tax and transfer system to enable the economy to deliver the growth, incomes and jobs that underpin the nation’s prosperity.

“The mining industry delivers benefits for all Australians via the tax and royalty revenue it pays to governments each year. It has been paying tax consistently for years and record amounts over the last decade.”

The record company and royalties payments are highlighted in an Ernst & Young report commissioned by the MCA which also shows that in the last decade (between 2011-12 and 2020-21), the mining industry contributed $254b in company taxes and royalties ($142b and $112b respectively).

Company tax and royalties payments are expected to continue increasing in 2021-22 in line with increases in export earnings. This is driven by a positive outlook in the price and quantity produced of metallurgical and thermal coal coupled with a robust year for iron ore, gold and base metals.

Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content).
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