07/05/2010 - 14:53

Flanagan's tax anger spills to papers

07/05/2010 - 14:53

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Atlas Iron chief David Flanagan has taken the next step in a growing mining industry campaign against the proposed resources super profit tax, penning an open letter to the prime minister that will be published in newspapers tomorrow.

Atlas Iron chief David Flanagan has taken the next step in a growing mining industry campaign against the proposed resources super profit tax, penning an open letter to the prime minister that will be published in newspapers tomorrow.

In the letter, Mr Flanagan warns the 40 per cent tax on a mining company's super profits will have disastrous economic consequences, including inflicting substantial pain on working families the tax was designed to help.

The letter wraps up a jam packed week of angry protests from the mining industry, with claims the proposed tax is an attempt to nationalise the sector.

"Why would investors put their money into a project from which the Government will snatch up to 57 per cent of the profit when they can invest in developments overseas with higher returns?" Mr Flanagan asked.

"The answer is, they won't.

"It is a flawed and ultimately highly destructive attempt to redistribute wealth from those involved directly in the resources industry to those with supposedly no link to it.

"The problem, Prime Minister, is that no such person exists in Australia. Everyone, to one extent or another, relies on the resources industry to help underpin their living standards.

"Therefore, your Resource Super Tax plan is going to inflict significant and, in many cases, unaffordable damage on the very people you claim it is designed to help."

Mr Flanagan was among a number of mining executives, including Rio Tinto Iron Ore chief Sam Walsh and Fortescue Metals Group boss Andrew Forrest, to attend a dinner with Prime Minister Kevin Rudd earlier in the week.

A couple of days later, a group of 10 mining executives fronted media in Perth to continue the industry's rage against the super profit tax.

Mr Rudd has dismissed the protests of "a few billionaires" and urged Australians to take the comments of Mr Forrest and mining magnate Clive Palmer with a "grain of salt".

Mr Palmer has previously said that he's shelved two big projects because of the proposed tax.

"I noticed there are a few billionaires out there in the last 24 hours saying that they are going to have a real problem with this," Mr Rudd told reporters in Geelong.

"I'm pretty interested in what working families need for better super to have a decent retirement."

Mr Flanagan's letter coincides with a print advertising campaign against the tax run by the Minerals Council of Australia.

The campaign states that the mining industry has paid $80 billion in taxes during the past decade and declared "that's a fair share".

Treasurer Wayne Swan was not moved by the campaign.

"Never forget it was the council itself that made a submission to the independent tax inquiry suggesting the resources tax be replaced with a profits-based tax," he told reporters in Canberra today.

The government would have been derelict in its duty had it not responded to the Henry review recommendation relating to a resources rent tax, he said.

"There is nothing new in this country about a 40 per cent profits-based tax."

Mr Swan also countered the industry's argument that the tax would create uncertainty about new projects.

There was no certainty for mining companies under present arrangements because state governments could jack up their royalties, he said.

Mr Abbott said the tax would kill the nation's prosperous mining industry.

"Kevin Rudd does not have a plan for the economy, he has a plan to kill the mining boom stone dead," he told reporters in Adelaide during a visit to a mining services company .

"This is a dagger aimed at the heart of Australia's posterity."

He ruled out supporting a watered-down version of the proposed new tax.

Meanwhile former treasurer Peter Costello accused the government of "bodging" a graph to make it look as though taxation from mining companies had been falling.

The graph did not take account of the 30 per cent company tax rate the companies already pay.

"A number of people would have seen that graph and thought taxes on mining were falling, they have not been falling," Mr Costello said.

The existing 30 per cent company tax rate should be sufficient for a government during any resources boom, he said.

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