Australia’s mining industry faced its highest effective tax rate in almost a decade in 2014-15, according to new research by the Minerals Council of Australia (MCA) and Deloitte.
The MCA’s eighth minerals industry tax survey, which measures the combined effective tax rate of company tax and royalties, revealed that the tax ratio grew by eight per cent from 46.3 per cent to 54.3 per cent in the year to June 30 2015.
This is the third straight year the effective tax rate has increased and compares to an average rate of 44.4 per cent over eight years of survey data. It is also the highest tax ratio recorded since the survey started and the first time it has exceeded 50 per cent.
MCA deputy chief executive David Byers said the report should provide a ‘final nail in the coffin’ for WA Nationals’ leader Brendon Grylls’ proposal to increase tax on the state’s iron ore miners by as much as $8 billion over the next four years.
“If the WA Nationals want to retain any economic credibility in the lead up to the state election they must ditch the proposal,” Byers said.
“The cold, hard reality is that Australia risks taxing itself out of global markets. Our company tax rate has been frozen in stone for 15 years while our competitors have lowered their rates.”
Byers added that Australia’s company tax rate was now five percentage points above the developed country average and eight points higher than the Asian average.
“And state jurisdictions must also be cognisant of the need to keep the overall burden of mining taxation comparable with our international competitors,” Byers said.
“With profits low, royalties account for 60 per cent of tax collections in 2014-15. The high share of royalties reflect the fact that royalties do not take account of the profitability of the sector which endured tough conditions in 2014-15.”