Australia’s resource tax rate will be 40 percent and won’t be set at different levels for various commodities, Resources Minister Martin Ferguson said as companies look for a compromise on how the levy will be applied.
“We’re not talking about different tax rates,” Ferguson told Australian Broadcasting Corp. radio today. There will be “generous transitional arrangements” for existing projects and “there will be a headline rate of 40 percent.”
Prime Minister Kevin Rudd has seen public support drop since announcing his proposed tax on the “super profits” of resource projects, a levy mining companies say will stall investment in an industry that in April accounted for 57 percent of the value of goods exported.
Australia, the world’s biggest shipper of coal and iron ore, announced the new tax on May 2 as part of an overhaul that includes a phased cut in company tax rates to 28 percent from 30 percent by mid-2014. Rudd’s government is holding talks with resources companies on the plan.
“At present there is no formal acknowledgement from the government” that the mining industry’s tax concerns will be addressed, the three companies said in a joint statement after the talks. Ferguson wouldn’t comment on the meeting.
The government says 80 companies agreed to join the consultation process that is led by a Treasury panel. A first report outlining the issues under discussion will be released next month and a final document late this year, according to the government. Legislation will be put to parliament in late 2011 if the Rudd government is re-elected at a national ballot due by April.
“Nothing has changed,” Treasurer Wayne Swan said in Canberra today. “We said that our bottom line was a 40 percent rate. We said there would be generous transitional provisions and we said we’d discuss the detail with the industry, and that’s precisely what we’re doing.”
State Resources Minister Paul Holloway in South Australia, home to BHP’s Olympic Dam where a A$20 billion ($17.3 billion) expansion is under review, has called for special consideration for the project. The mine has the largest deposit of uranium in the world, the fourth-largest copper reserve and Australia’s largest reserve of gold.
“The federal government gave us a good hearing and we’re waiting for them to come back to us,” Holloway said in an e- mail last week.
Sydney-based miner and steelmaker OneSteel Ltd., Australia’s second-largest producer of the alloy, said on May 26 it wants the proposed levy to only apply to new investments.
“We’ll make sure, as the premier of South Australia has raised with me and as I have discussed for example with OneSteel, that we will take on board the special nature of their operations,” Ferguson said today.
Documents released when the proposed levy was announced said the consultation process will focus on the point at which profits are taxed. Companies are seeking answers how the levy will be applied to processed minerals and raw commodities.
“The issue of the taxing point is central to our considerations,” Ferguson said today without providing details.