WA could be hit with Federal tax

The Chamber of Minerals and Energy of Western Australia has concerns for tax review's impact.

The Chamber of Minerals and Energy of Western Australia (CME) chief executive Reg Howard-Smith has expressed concern for the fair distribution of taxation revenue to Western Australia.

Smith recently welcomed the State Government’s submission into the Henry Tax Review and said the retention of revenue derived from the State is of primary concern, particularly the significant income collected as a result of the strength of the Western Australia resource sector.

“Royalties derived from resource projects are an essential part of State revenue and are required to deliver important services and infrastructure for all Western Australians,” Howard-Smith said.

“Suggestions that the Federal Government may impose a Federal resources tax in place of, or additional to, State royalties are of serious concern.

“Royalty rates are an important factor in making decisions about mining projects, including determining which States provide the best operating environment for new investments in resources projects.”

According to Howard-Smith, a Federal resources tax could lead to a loss of state control of revenue leavers, reduced flexibility and a lack of incentive for State development.

Howard-Smith said the Federal Government does not have responsibility for land management and royalties are a rent for the use of resources in Western Australia, not a tax.

“There is no guarantee future Federal Governments would redistribute proposed centralised royalty revenue in a fair way back to the States and Western Australia could be disadvantaged,” he said.

Howard-Smith said while CME supports the general principle of the Henry Tax Review — to improve efficiency and effectiveness of the tax system — any concept which shifts the benefits derived from the Western Australian resource sector out of the State should be rejected.

Howard-Smith said centralisation of royalty collection would not necessarily introduce efficiencies.

“We will be calling for a tax system which is efficient but which also ensures fair distribution of revenue across the Country,” Howard-Smith said.

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