The Australian Chamber of Commerce, Business Council of Australia, and Minerals Council of Australia have banded together to call on the senate to abolish the mining tax.
In a joint statement between the ACB’s COO John Osborn, BCA’s chief Jennifer Westacott, and MCA’s head Brendan Pearson, they stated that “the tax imposes an unnecessary additional burden on Australia’s mining industry, which already pays about $20 billion a year in company tax to the Commonwealth and royalties to state governments”.
They went on say that “it also acts as a disincentive to invest in Australia’s minerals sector at a time when the industry is facing pressing challenges to improve productivity and cost competitiveness”.
“The mining tax is simply another layer of tax on top of company tax and royalties. It does not constitute tax reform.
“Repeal of the MRRT will help improve Australia's reputation as an attractive investment destination in the highly competitive global resources market. A strong, growing industry attracting investment will secure prosperity, jobs and higher government revenues for Australia into the future.”
Their statement comes as the mining tax again failed to raise its predicted revenues, producing only $232 million this financial year, as opposed to the $4 billion forecast.
BHP was the only iron ore miner to pay the tax in the six months to December.
As Australian Mining reported, in the half year ended 31 December 2012 BHP paid US$78 million for the MRRT, however it actually came out ahead by US$462 million in the half year ended 31 December 2013 thanks to a series of offsets
“The Group expensed US$29 million of MRRT in the period (31 December 2012: benefit of US$ 62 million; 30 June 2013: expense of US$ 114 million). This was offset by the remeasurement of deferred tax assets associated with the MRRT, which reduced taxation expense by US$ 491 million (31 December 2012: increase of US$ 140 million; 30 June 2013: increase of US$ 207 million),” BHP explained.
It is understood that this is in part due to concessions which allow miners to deduct the market value of existing assets over many years instead of subtracting the book value over five years.
This means large investments the miner made in operations at a time when commodity prices were at their peak can be used to offset their liabilities.
Added to this is also around $1.7 billion in tax credits that both Rio Tinto and BHP accrued this time last year, which allowed them to offset the mining tax, although they do not affect the levels of company tax they pay.
It is understood the tax has raised around $400 million since its introduction.
The Abbott Government has long-called for the abolishment of the tax and is expected to do so when the new Senate comes into term after July 1.
However, the joint group called on to Senate to “vote this week to repeal the MRRT”.
The Greens have previously called for the “flaws” in the tax to be fixed and want to see a higher tax rate, the inclusion of gold and cutting Commonwealth refunds of state royalty increases.