Economists have called for the newly installed Labor Government to completely reform the proposed Mineral Resources Rent Tax (MRRT).
Speaking at the Australian Agricultural and Resource Economics Society public forum in Canberra, a number of economists called for the Government to overhaul the tax.
Many believed that the MRRT will harm coal and iron ore exploration in Australia and dissuade investment.
“We need to go back to the drawing board… (the Henry Tax Review) contains a wide range of sensible proposals that should be taken as a starting point,” University of Wollongong professor Henry Ergas said.
The tax is a patch up and an exercise in buying time, he added.
“This tax could be so much better; the compromise suits the pressure groups and is probably not consistent with what the rest of the 99 per cent of Australians want,” University of Melbourne professor John Freebairn said.
Further comprises on the planned tax, especially to the Greens, is causing concerns amongst the mining industry.
Fomer BHP Billiton chairman Don Argus voiced his concern at the potential harm a wrongly framed tax may have, as it may “see foreign investment capital disappear, and reduce the ability for companies to effectively grow their enterprise values."
Argus said it is imperative that the Australian mining industry ability to compete is protected.
He went on to say that “whilst there appears to be a number of uncertainties still to be resolved, I believe the consultation process set out in the terms of reference for the policy transition group will address the concerns that I have been hearing from some industry participants."
Argus recently accepted an invitation from the Government to run a review of the planned resources tax.
Currently, the Greens are pushing for the tax rate to be increased from Prime Minister Julia Gillard’s agreed upon 30% to a higher 40%.
The potential for reforms on the mining tax is already facing hurdles, with the Federal Government refusing to discuss it at the upcoming national tax summit.
Federal treasurer Wayne Swan had previously it would not consider discussions on the MRRT as it is already undergoing lengthy consultation processes.
However, he later announced he was open to discussing the tax at the summit.