OECD calls for higher mining tax

The OECD has made calls for Australia to increase the level and scope of its mining tax.

The OECD made calls for Australia to increase the level and scope of its mining tax.

It said that in doing so, it would prevent a potential inflation blowout, due to a heavy over reliance on the demand from China.

Weaker growth in China and ongoing global financial turmoil posed real risks for the tax.

The group stated that the Gillard Government’s Mineral Resources Rent Tax will see the “taxation of profits of mining companies likely to remain much lower than before the mining boom.”

It also went on to say that by tightening the focus to just coal and iron ore it could harm incentives for other resources projects, and act as a deterrent for marginal projects.

"A well designed resource rent tax extended to all commodities and all companies irrespective of their size would be desirable," it said.

On top of this, the OECD urged the Government to put the tax into the reserves rather than spend it all on infrastructure, to protect it against future economic crisis.

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