Axing fuel tax credits will hurt mining industry: QRC

The mining industry says that any move to cut the fuel tax credits for the off-road use of diesel mine vehicles will threaten the viability of future developments.

Speculation is mounting that that the federal government will axe the fuel tax credit for mining companies as a way of raising an estimated $2 billion to fund the Government’s big ticket spending commitments.

The move comes as Julia Gillard yesterday announced a $12bn hole in tax revenue forecasts this financial year.

Queensland Resources Council chief Michael Roche says axing the fuel tax credit for off-road use of diesel by exploration and mining companies would have damaging effects for the industry.

“The biggest cheer squad for this move are the Greens, who are trying to claim that the fuel tax credit ends up in the pockets of so-called mining magnates," Roche said.

"The reality is that it will slug remote regions unable to access reliable and competitively priced energy.”

Roche warned that cutting the rebate could make the industry less competitive and slow investment further.

"Axing of the fuel tax credit will threaten the viability of existing and proposed resource developments across northern Australia,” he said.

"Diesel fuel is essential for mining, processing and transport.”

Fuel tax credits were worth $2billion to miners in 2010-11.

Green groups have been pushing for the axing of fuel credits on the industry for some time.

Victoria McKenzie-McHarg, safe climate campaign manager for environment, said while ordinary consumers pay 38 cents a litre excise on their fuel but miners pay just 6 cents, SMH reported.

“We know the government wants to take action on climate change," McKenzie-McHarg said.

"But it's very difficult to stop climate change when the government is simultaneously funding it with billions of dollars of handouts to polluters."

Meanwhile, The Greens have continued to campaign for miners to lose the credits.

Before last year’s budget was released, now Greens leader Christine Milne urged the government to consider the cuts.

“If the government is looking for ways to save money and balance the May budget, the $2 billion diesel fuel rebate is an excellent place to start and the Greens will ­continue to back such a move,” she said at the time.

“We’ve said to the government many times that cutting subsidies which encourage use of polluting fossil fuels, like the diesel fuel rebate for mining companies, is not only sensible ­climate policy but also sensible economic policy.”

However the mining industry says the diesel tax credit removes a tax impost on a business input in line with other taxes on business inputs.

"Any change to the fuel tax credit scheme would simply be a new tax on mining, which the industry would certainly oppose vigorously,” Minerals Council of Australia Mitch Hooke has said.

Last month, Peabody Energy chairman Eric Ford said Australia needed to stop being complacent about regulatory and taxation reform for the mining sector so it can regain its competitive edge.

He said the resources sector knew it would have to pay its portion of taxes, particularly during the boom years, but the flurry of new taxes introduced by both state and federal governments in recent years had brought policy uncertainty.

“The common thread that runs through these tax changes is a worrying complacency about Australia’s place in the world,” he said

“Underpinning this mindset is the apparent view that Australia’s competitiveness in mine production can never be lost; that more and more tax and regulatory burden can be added without risking the competitiveness of the sector.”

Image: The Australian

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