The mining industry has lashed out at suggestions the federal government is considering a cut to the diesel fuel tax rebate to prop up its budget, saying a further reduction was the equivalent of introducing a fourth new tax on the sector this year.
According to media reports, the federal government is considering a further reduction to its diesel fuel rebate, a $5 billion-a-year scheme of which 40 per cent is used by miners.
The government already plans to cut the rebate by 6 cents a litre when the carbon tax becomes effective in July.
AMEC chief executive Simon Bennison said he found the media reports "extremely alarming".
“AMEC met today with senior Treasury officials and was assured a further reduction in the diesel fuel rebate was not in their policy considerations at this point in time," Mr Bennison said.
“If the media reports turn out to be true, the government will be met with resistance from the industry.
“The diesel fuel rebate is not a subsidy. It is a credit for a tax on a major mining and exploration input that shouldn’t be paid in the first place. Reducing the diesel fuel rebate defies common tax policy principles.
“Mining and exploration companies working in remote areas have little option but to use diesel."
Chamber of Minerals and Energy Western Australia chief executive, Reg Howard-Smith, said diesel fuel was used on the majority of minesites in the country, as transport fuel and for electricity generation.
He said the sector was stunned it could be facing another blow.
“The Federal Government announced as part of the carbon tax package a reduction to the diesel rebate last year and if reports are correct, industry is now facing a further hit,” Mr Howard-Smith said.
“The diesel fuel excise was never designed as a general tax measure but as a revenue source to support road infrastructure.
“The rebate recognised that much of the diesel the mining sector consumes occurs off-road or to generate electricity.
“The Diesel Fuel Rebate was never a ‘subsidy’ and its further reduction constitutes a new tax.
“This will be particularly detrimental to WA’s smaller producers that rely on diesel.”
Minerals Council of Australia chief executive Mitch Hooke said any further reduction of the tax credit would violate basic principles of tax policy; efficiency, neutrality, equity and simplicity.
"Cutting the fuel tax credit is the same as imposing a new tax on a business input.,” Mr Hooke said in a statement.
“And like all tax hikes it would result in lost output and reduced international competitiveness.
“The mining tax, carbon tax and reduction in fuel tax under the price on carbon all start on July 1.
“A new reduction to the fuel tax credit scheme in the Budget would make it new tax number four in 2012.
“If these media reports are accurate, it would fly in the face of the Government's criticism of the states for imposing new costs on mining through royalty increases.”