Greens call for mining tax loopholes to be closed

The Greens are calling for loop holes in the mining tax to be fixed following the revelation it had only raised $126 million in its first six months.

A figure well below the full-year forecast of $2 billion.

The Greens this week have introduced a bill into parliament that would stop the Federal Government having to refund increases in state royalties to miners through the minerals resource rent tax (MRRT).

The move comes as Prime Minister this week blamed the states for the failed mining tax.

When the MRRT was reworked in 2010 following the axing of Kevin Rudd, the government agreed that all state royalties rises would be footed by the commonwealth.

The proposed amendment aims to close the depreciation loophole that allows companies to deduct the market value of existing assets over many years instead of deducting the book value over five years, the Herald Sun reported.

Greens deputy leader Adam Bandt said the Parliamentary Budget Office had estimated the measure would raise an additional $4 billion to 2016/17.

"This gaping loophole in the mining tax must be closed before the budget," he said in a statement on Thursday.

"Labor is taking more money off single parents than it has collected from the mining tax."

Meanwhile mining group AMEC has called for the mining tax to be renegotiated, placing all miners on a new revenue raising scheme.

AMEC chief executive Simon Bennison said s profit-based tax linked to commodity prices was fraught with risks.

"AMEC strongly recommends the federal government scrap this current MRRT and start again, in full consultation with the mining industry, and not just a select few," he said in a statement on Wednesday.

The group was not included in discussions on the MRRT in 2010.

BHP Billiton, Rio Tinto and Xstrata were involved in the MRRT renegotiation which took place just seven days into Gillard’s leadership.

According to the Australian the after two days of talks the three mining juggernauts left the negotiation table with everything they wanted.

It has been reported both Wayne Swan and Martin Ferguson gave away more than they were required, contributing to the poor returns the tax has produced.

The 1½-page agreement signed by the ministers and mining executives on July 1, 2010, replaced the original 40 per cent resource super profits tax with a much weaker 30 per cent minerals resource rent tax applying only to coal and iron ore, SMH reported.

The miners argued that the extraction of minerals required intricate expertise, understanding how to exploit the geology most efficiently, this saw the implementation of an ‘extraction allowance’ which cut the actual rate from 40 per cent to 22.5 per cent.

Adding pain to injury was a drafting error.

The agreement allowed "all state and territory royalties" to be deducted from the tax.

But Ferguson thought the words referred to "royalty rates that applied, or changes to royalty rates that were scheduled to apply in the future, as at 2 May 2010''.

His interpretation was based on what was stipulated in the original super profits tax.

Instead, the new agreement exposed the federal government to an expense with no ceiling.

Meaning the Commonwealth had to refund whatever the state governments chose to charge in the future.

Without delay, Western Australia increased its iron ore royalty from 5.6 per cent to 7.5 per cent, Queensland upped its coal royalty rate from ten per cent to 12.5 per cent for coal sold between $100 and $150 a tonne.

New South Wales royalties also rose, but the increase only applied to companies subject to the Federal Government’s MRRT.

As a result of the concessions it is highly doubtful mining companies will make any substantial mining tax payments for some time.

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