A 30 per cent mining tax is set for July this year after being passed through the lower house on November 23. The controversial legislation was given the green light after the Government made agreements with key independents to secure its passage. Debate over the tax remains extreme. Greens MPs want it broadened before passing it through the Senate.
A tax on iron ore and coal mining profits has been predicted to raise $7.7 billion in its first two years.
The new revenue stream was approved in November following deals struck between the Government, key independents and the Greens.
The tax threshold was increased to $75 million (up from $50 million) to secure the support of Andrew Wilkie. The Government has committed $200 million toward scientific research into coal seam gas mining impacts on groundwater and farming in a compromise to MPs Rob Oakeshott and Tony Windsor. NSW and Queensland communities are engaged in a heated debate over the impact of the controversial gas mining process.
Concerns centre over the mining sector’s claims that CSG process is eco-friendly. Liquid products from hydraulic fracturing (fracking) and fears of groundwater contamination have prompted a moratorium on the technique in NSW.
The mining tax has been designed to tap into the booming mining industry and was negotiated with global mining giants BHP Billiton, Rio Tinto and Xstrata in 2010.
The Association of Mining and Exploration Companies has pushed for the tax to be based on a production threshold instead of a profit threshold.
“Iron ore prices are not going to stay at high levels forever, they have already fallen quite a lot and the profitability levels of companies are all different,” chief executive Simon Bennison has said.
The mining tax at a glance
- The Mining Resources Rent Tax (MRRT) will start on July 1, 2012;
- The tax rate will be 30 per cent, which will be phased in when profits reach $75 million and paid in full at $125 million;
- Between 20-30 companies will pay the full rate;
- The tax is estimated to raise $7.7 billion in its first two years;
The Greens have pushed for the tax to be lifted to 40 per cent and to be applied to uranium and gold mines. The bill will need Greens support to pass through the Upper House in early 2012.
Critics of the tax claim it favours big miners over small and medium sized operators and that the provision to offset future state royalty increases against the tax will impact budget figures.
Green revolution proponents have pushed for the mining tax to fund better environmental outcomes.
The wealth generated by Australia’s non-renewable resources should be used to safeguard the future for everyone, which requires a genuine commitment to be environmentally-friendly. Liquid waste from mining sites, greenhouse gas emissions and land degradation are key challenges for this fossil-fuel dependent industry.
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