Miners and lobby groups have responded furiously to the federal government's intention to introduce a new resource super tax with BHP Billiton chief Marius Kloppers saying it will impact the future wealth of all Australians.
Miners and lobby groups have responded furiously to the federal government's intention to introduce a new resource super tax with BHP Billiton chief Marius Kloppers saying it will impact the future wealth of all Australians.
The Rudd government yesterday belatedly released the Henry tax review, which made 138 recommendations, most of them largely ignored by the government.
Instead the federal government selected a handful of recommendations, including lower taxes for smaller businesses and boosting Australians' superannuation contributions.
However the centrepiece of the Rudd government's tax reforms is a new 40 per cent tax on the super profits of resource projects, meaning the profits that are made after the capital cost of a project is recovered.
The government is estimating to rake in about $9 billion a year from the new tax when it is introduced in 2012.
The introduction of new taxes on the resources sector emerged late last week following Prime Minister's Kevin Rudd's pre-budget speech, which caused a flurry of angry responses from miners and lobby groups.
It was revealed late last week that the federal government was looking to introduce a new resource rent tax to the minerals sector. The tax already applies to the petroleum sector.
Today Australia's largest miner, BHP Billiton, expressed its disappointment with the government's plant to impose the new resource rent tax, which would increase the company's effective tax rate on its profits from 43 per cent to about 57 per cent from 2013.
"The stability and competitiveness of the tax system have been central to the investment in resources in Australia," Mr Kloppers said in a statement.
"If implemented, theses proposals seriously threaten Australia's competitiveness, jeopardise future investments and will adversely impact the future wealth and standard of living of all Australians."
BHP revealed that in 2009, it paid taxes totalling $6.3 billion, comprising of $3 billion in company tax, state royalties of $1.9 billion, petroleum resource rent tax of $1.1 billion and $350 million in other taxes.
"The government has not defined all aspects of the design, implementation and application of the new tax, and until they are clarified we cannot be certain what the full implications for the industry will be," Mr Kloppers said.
"However, this significant new tax will have the effect of making investments in Australia much less attractive."
Xstrata chief executive Mick Davis said the tax change will result in significant and disproportionate additional taxation on the industry and could curb the large scale, long-term investments required to develop Australia's natural resources.
"Mineral investments require long-term certainty over fiscal arrangements," Mr Davis said.
"The government's intention to change the basis on which existing mining investments were entered into sends a particularly worrying signal and undermines Australia's reputation as a stable investment destination, hampering the ability of mining companies and other investors to assess the basis for, or to commit to, future long-term investment.
Xstrata operates coal projects on the east coast and has nickel mines in Western Australia, which is acquired when it bought Jubilee Mines in 2008.
The sentiment was echoed by business lobby groups, with the Chamber of Minerals and Energy WA saying that resource super profit tax is a "$9 billion hand brake" on the sector.
"We had hoped the Henry Tax Review would streamline the Australian tax system and promote growth, rather it seems to have added complexity and will limit growth," CME chief executive Reg Howard-Smith said.
"While we are still trying to understand the complexity of the new reform it appears it will act as a disincentive for investors to develop new or expand existing projects."
Chamber of Commerce and Industry WA chief executive James Pearson said he was concerned the federal government's response to the Henry review recommendations will come at too great a price for the local economy.
"... CCI is concerns that the federal government is playing wedge politics with Australian businesses by pitting the resources sector against all other employers," he said.
"It makes no sense to introduce new taxes and charges that will threaten the international competitiveness of the sector, on which almost all WA businesses, directly or indirectly, depend.
"Western Australian businesses more than ever are being relied upon to lift the nation's economy out of the downturn. The penalties to be imposed on the resources sector will make that task much harder."
