Increase to mining tax will hurt industry: Hooke

Minerals Council of Australia chief, Mitchell Hooke, wants taxes on mining companies left as is in order for the industry to remain internationally competitive.

Treasurer Wayne Swan is under pressure from The Greens to make changes to the mining tax after it was revealed the tax was billions of dollars short of its predicted revenue target.

Proposed changes include increasing the tax rate to 40%, cutting Commonwealth refunds of state royalty increases and including other minerals as part of the tax, ABC reported.

However in a statement released today, Hooke warned against upping the mining tax rates.

“Full crediting of royalties is a key feature of the MRRT's design, one that ensures double taxation is avoided and that delivers a measure of stability and predictability to the overall tax burden on coal and iron ore projects, which are already at the upper end of global mining tax rates,” Hooke said.

“Even before the introduction of the MRRT, coal and iron ore were among the highest taxed industries in Australia based on the two main fiscal instruments used to collect mineral resource revenues – State and Territory royalties and Commonwealth company income tax.”

“We should be looking at how we can be internationally competitive for investment and jobs for the benefit of Australians today and future generations rather than how we can keep carving up the pie.”

Hooke warned that Australia’s mining industry is in danger of losing its competitive advantage as it was taxed above the global average.

“The industry's effective tax rate is in excess of 42 per cent against a global average of 39 per cent.”

Ensuring Australia stays competitive on the global market has been a hot topic in the resources industry recently, with several high-profile players stating the need for policy reform was urgent.

Speaking at the NSW Minerals Council Industry Conference professor Henry Ergas from the University of Wollongong also highlighted the challenges facing the mining industry and said serious reform is needed to ensure Australia remains globally competitive.

“If we continue to face rapid cost escalation then we could rapidly lose market share and even lose volume,” he warned.

Ergas slammed the MRRT for its long-term impact on the competitiveness of the industry arguing it had a negative influence on ‘decisions going forward’ saying it put in projects in jeopardy.

“It’s going to make investing in Australian coal and iron ore projects less attractive than investing in resources overseas.”

Image: theage.com.au