The Association of Mining and Exploration Companies (AMEC) say the Minerals Resource Rent Tax will be anti-competitive and create an uneven playing field between emerging miners and large conglomerates.
Its submission, which references independent modelling by the University of Western Australia, states there will be a difference of at least 4% in the level of effective total taxation between projects which existed before 2 May 2010 to new developments after 1 July next year.
AMEC say that before the introduction of the MRRT, the average total tax (comprising of income tax and royalties) for miners would have been about 38%, however post MRRT this tax rate jumps to more than 44% in some cases.
This results in small emerging coal or iron ore miners pay an extra 6% in taxes, compared to larger miners 2% increase.
“This differential is a significant issue in respect of competitive neutrality, and puts the small emerging miners at a significant financial disadvantage,” AMEC said.
It went on to say that Australian coal and iron ore miners will be at the top end of the scale internationally when it comes to taxes.
This will detrimentally affect Australia`s international competitiveness, and reputation as a safe place in which to invest,” AMEC chief executive, Simon Bennison, said.
Australia’s sovereign risk rose following the introduction of the proposed Resources Super Profit Tax last year, hampering investment.
“I have written to the Prime Minister drawing attention to these serious concerns, and confirmed our member`s ongoing opposition to this ill conceived, punitive and bad tax policy,” Bennison said.
“AMEC has also expressed concern that the draft legislation is incomplete and that a further 17 parts are still to be prepared and released. This is an unsatisfactory situation as many companies cannot complete their financial modelling without this data.”