29/07/2010 - 00:00

Juniors back in tax fight

29/07/2010 - 00:00

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THE federal government has refused to make a pre-election guarantee for junior miner representation on the panel that will finalise its proposed 30 per cent tax on coal and iron ore mining profits.

Juniors back in tax fight

THE federal government has refused to make a pre-election guarantee for junior miner representation on the panel that will finalise its proposed 30 per cent tax on coal and iron ore mining profits.

Membership of the Don Argus-chaired Policy Transition Group is shaping as a critical election issue as smaller miners argue their interests have been sacrificed to secure a tax deal with the big miners.

Small and mid-tier miners say their exclusion from the tax negotiations with BHP Billiton, Rio Tinto and Xstrata delivered a tax that favours big self-funded miners over smaller firms with limited financial capacity.

The Association of Mining and Exploration Companies this week confirmed it would resume a national advertising campaign opposing the tax that will run in parallel with adverts funded by United Retail Federation and Queensland Chamber of Commerce and Industry.

The ad blitz again threatens to derail the government’s wavering electoral prospects in WA, where opposition to the original super profits tax contributed to the downfall of former prime minister Kevin Rudd.

It is understood Resources Minister Martin Ferguson has previously asked miners to suggest possible candidates for the Argus panel. But despite the potential to mute anti-tax sentiment, committee membership is unlikely to be resolved until after the election

“The membership of the Policy Transition Group will be determined by the government and announced at an appropriate time with appropriate consideration of caretaker conventions,” a spokeswoman for Mr Ferguson said.

The committee would be “mindful” of the needs of companies across the sector, she said.

Opposition resources spokesman Ian Macfarlane said he agreed that concessions granted to major producers meant small miners would pay “an unreasonable proportion” of the tax.

Worse still, the tax would not only make Australian miners less competitive, he said, but would also bind future budgets and surpluses to fluctuating commodity prices and exchange rates.

“That would be extraordinarily dangerous ... and places an uncertainty in the budget which is intolerable,” Mr Macfarlane told WA Business News.

In the event the tax is not scrapped, the smaller miners argue there should at least be further concessions, including increasing the tax threshold to reflect their higher cost of finance, doubling the tax-free ceiling to $100 million, and making interest repayments deductible.

They also want low-value magnetite iron, which requires extensive processing, to be exempted from the tax entirely.

Additionally, miners fear the Greens will seek to extend the tax if they gain the balance of power in the Senate. The Greens have already said they want to raise the headline tax rate while WA Greens senator Scott Ludlam last week confirmed he wanted it extended to at least include uranium.

Mr Ferguson has dismissed claims the government would strike any such deal.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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