Western Australian mining companies could cost the state government up to $2.4 billion if they decide to fight the proposed $5-a-tonne ‘levy’ on iron ore exports.
The fee, which up until now has been $0.25-a-tonne, could be successfully challenged in a court of law, Murdoch University law lecturer Lorraine Finlay told the ABC.
If the challenge is successful it could also threaten the already existing revenue stream leaving the Western Australian government poorer by up to $120 million.
“The concern with the production rental levy is that it’s really an excise duty dressed up as a levy,” says Finlay, “and if the High Court held that that was the case, then the levy would be constitutionally invalid.”
So how would the mining companies get around the tax? Under Section 90 of the Australian constitution, states are not allowed to introduce taxes on the production, manufacture, sale or distribution of goods.
The increase is being championed by Nationals Leader Brendon Grylls who says the old agreement – dating back to the 1960s – needs to be upgraded to reflect 2016 prices, not those of 50 years ago.
“The Auditor-General reviewed State Agreements in 2004, he made it very clear that future parliaments shouldn’t be shackled by the terms of a 1960s agreement,” says Grylls.