Doubts are being raised over the Gillard government’s expectations of revenue it will collect from mining taxes paid by Australia’s three biggest resource companies.
The West Australian is reporting that industry insiders believe the expected tax taken from Rio Tinto, BHP Billiton and Xstrata will be significantly less due to depreciation of multi-billion-dollar assets against their liability in the minerals resources rent tax (MRRT).
While it was initially thought the big miners would suffer most under the tax, the latest revelations show it may be smaller companies who cop the biggest blow.
This is determined by a company’s assets as of 2 May last year when asset worth is frozen for depreciation purposes.
From the outset, it has been argued that the MRRT will affect each company differently, based on their size and revenue.
Fortescue boss Andrew “Twiggy” Forrest yesterday hit back at accusations from Federal Resource Minister Martin Ferguson that he was being racist, by countering that the mining tax was racist towards Australian companies.
Forrest has threatened to take his fight to the High Court, arguing that the mining tax was designed by BHP and favours the three big miners.
It is now thought that the big mining companies will use a depreciation clause in the draft legislation to control how they pay in tax.
The federal government maintains the tax will be fair and argues that the biggest miners will pay the most, in line with their profits.
After its introduction on 1 July next year the mining tax is expected to bring in $11.1 billion dollars in its first three years.
A spokesman for federal Treasurer Wayne swan defended the expectations of $3.7 billion in 2012-13, $14 billion in 2013-14 and $3.4 billion the following year the government has.
"The Government has full confidence in all Budget forecasts, including revenue forecasts," he told The West.