An independent study by Deloitte Access Economics, the Minerals Tax Survey 2017, has revealed that the Australian minerals industry paid an effective tax take ratio of 51 per cent in the 2015–16 financial year, representing the second highest tax ratio since the survey’s inception nine years ago.
“The tax is only slightly below the highest recorded level in the history of this survey,” said Deloitte Access Economics partner Stephen Smith in the report.
“[The] moderation in the rate seemingly [owes] more to the temporary impact of asset sales and reductions in prior year tax losses rather than substantive improvement in business conditions for miners.”
The survey, conducted on behalf of the MCA (Minerals Council of Australia), collects data from three major mining groups — coal, gold and iron ore — and includes the participation of 25 companies.
While the most recent results of 51 per cent showed an improvement over the previous year’s 54 per cent, the ratio was still eight per cent over the 10-year average of 45 per cent and about 10 per cent more than the industry tax ratio at the end of the 2000s.
The report cites this year’s improvement as partially attributable to a small recovery in commodity prices in the 2015–16 financial year (“when times are good and profits increase, the tax ratio falls, and vice versa”) but said company profits overall were still flagging.
The report lends credence to the industry’s defence against claims that it doesn’t pay enough tax. David Byers, interim chief executive of the Minerals Council of Australia, commented that the Australia’s current company tax rate (30 per cent) was too high to encourage business investment.
However, Deloitte’s report results take into account an effective tax rate of less than 30 per cent overall due to the inclusion of royalties along with company tax in its calculations, which it refers to as “pre-tax taxable income”.
“The Australian minerals industry paid $185 billion in federal company tax and state and territory royalties between 2005–06 and 2015–16,” Byers commented in a statement.
“By paying its fair share of company tax and royalties, the Australian minerals industry helps to fund the schools, hospitals, police and other essential services on which Australians depend.
“Effective tax reform would encourage companies to invest and create more jobs, especially in regional communities.”
The full report is available here.