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Three heavyweights from Australia’s mining sector recently joined forces to oppose a new tax – one that is apparently detrimental to the industry and its companies – from coming into effect.
The Australian Chamber of Commerce and Industry, the Business Council of Australia and the Minerals Council of Australia issued a joint statement on March 18, urging the Senate to repeal the Minerals Resource Rent Tax (MRRT).
After reviewing the tax, the industry groups concluded that it amounted to little more than an “unnecessary additional burden on Australia’s mining industry”, and is not the tax reform that it purported to be. In essence, the tax represents simply another layer atop the billions of dollars in taxes and royalties the industry is subject to every year.
According to the groups’ statement, Australia’s mining sector already pays around $20 billion per annum in company tax and royalties, to the Commonwealth and to state governments respectively. In total, the industry has paid approximately $117 billion in these expenses since 2006-07.
The potential implications should the tax be approved are immense. The groups are concerned it could damage the country’s reputation as a top investment destination, especially “at a time when the industry is facing pressing challenges to improve productivity and cost competitiveness”.
“What the mining sector needs now is a reduction in costs and certainty about the tax environment it operates in,” the statement read.
“That will help bring home the next wave of investment in this important sector.”
The Australian Industry Group (Ai Group) added its two cents as well, with chief executive Innes Willox stating that the tax could have a devastating effect on the Australian economy as a whole.
“Ai Group urges the Senate to support the repeal of the MRRT. This tax was poorly designed from the outset and it is patently failing to meet its own objectives,” he said.
Such taxes could play a part in whether this country can maintain a healthy mining engineering pipeline, and a decision from the Senate is expected this week.