Miners fear tax back flip

Miners are concerned that the Government may renege on aspects of its mine tax agreements.

Miners are concerned that the Government may renege on aspects of its mine tax agreements.

The big three, Rio Tinto, BHP Billiton and Xstrata, are considering walking away from the deal struck earlier this year, believing that the Government would not honour its agreement that all state and territory royalty taxes would be credited against the Mineral Resources Rent Tax (MRRT).

Resources minister Martin Ferguson is understood to have said that this agreement would not apply to any future increases in the royalties.

However, he later stated that “royalty rates that applied or changes to royalty rates that were scheduled to apply in the future, as at 2 May 2010, will be credited.”

Ferguson explained that if resources companies could claim on the royalties that are increased after the introduction of the mining tax, then it would be a drain on the Commonwealth’s finances.

Instead, he argued that it would be an issue that has to be taken up with the individual states.

According to The West, this position is opposing to the agreement signed between the miners and the Government back in July.

It stated that in the agreement, “all State and Territory royalties will be creditable against the resources tax liability”.

The miners saw this as a key issue in their support for the tax.

If the massive mining companies were to walk away from the agreement, it could force the Government into extending its current series of consultations with the industry as it searches for support.

This move by the Government follows reports that the implementation of the national mining tax may actually be unconstitutional.

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