Australian Prime Minister Julia Gillard’s government introduced legislation into parliament today for a 30 percent tax on coal and iron-ore profits.
The levy will ensure every Australian will “benefit from our valuable mineral heritage,” Assistant Treasurer Bill Shorten told lawmakers in the lower house of parliament in Canberra today. “Now is the time for our nation to choose to get a fairer return for the resource wealth in the ground.”
The government has pledged to lower the overall corporate tax rate by using the A$11.1 billion ($11.5 billion) it will raise over three years from mining companies including BHP Billiton Ltd. (BHP) and Rio Tinto Group. For the measures to pass the lower house, Gillard’s Labor government needs the backing of independent lawmakers including Tony Windsor, who this week imposed conditions on his support.
Windsor signaled he would only vote for the bill if stricter rules are introduced on coal-seam gas projects. Greens lawmakers have said they want gold included in the tax.
The legislation would have to be “re-jigged extensively” if the government considered such demands, Peter Arden, a senior research analyst at Ord Minnett Ltd. in Melbourne, said by telephone today. “They have a very tight deadline of July next year.”
The so-called minerals resource rent tax, or MRRT, replaced a 40 percent impost proposed by former Prime Minister Kevin Rudd. His plan collapsed after he was ousted by his own party following a slump in opinion-poll ratings spurred by an advertising campaign from mining companies against the levy.
Gillard, who replaced Rudd and led Labor to re-election in August 2010 with the backing of Greens and three non-party lawmakers, went on to negotiate details of the MRRT with the mining industry.
The government has said proceeds will reduce the corporate tax rate to 29 percent from 30 percent, provide A$6 billion in spending for roads, rail and ports, and increase the amount paid to people’s retirement savings to 12 percent of their salary by 2020 from the current 9 percent.
People are “very concerned” about coal-seam gas projects and “the companies themselves will say they don’t really understand the science of what happens underneath” the ground, Windsor said in an interview with Sky television on Nov. 1.
Gillard said that day that while management of land and resources is predominantly a state government responsibility, “of course we’ll discuss Tony Windsor’s concerns with him.”
Windsor wants as much as A$400 million a year set aside to fund “bio-regional assessments” to gauge the impact of coal- seam gas and other mining on aquifers, flood plains and farm land, the Sydney Morning Herald reported this week.
Including gold in the tax could generate “extreme complexity” as the mineral is normally extracted alongside other commodities that won’t be subject to the levy, Treasurer Wayne Swan said on Nov. 1.
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