THE state government has confirmed it is considering a possible High Court challenge to the constitutionality of the federal government’s proposed resource super profits tax.
The controversial tax proposes to replace state royalties with a Commonwealth tax on profits. But because minerals are constitutionally owned by the states, the Commonwealth’s right to take such action is unclear.
The Western Australian government has joined the mining industry in condemning the tax grab as an unjustified assault on its most important industry, which threatened $170 billion of proposed resources investment in the state.
Speaking at the Association of Mining and Exploration Companies convention in Perth this week, Mines Minister Norman Moore said the government was looking at a High Court challenge to what he called “the Rudd government’s tax on Western Australia”.
“There are $170 billion of projects in the pipeline over the next five years. Regrettably, and unnecessarily, these are under threat of the mining ‘super tax’,” Mr Moore told the convention.
“Needless to say, the Western Australian government is vigorously opposed to the Rudd government’s tax on Western Australia. The state is also contemplating the constitutionalism of the tax and will be in a better position to further this once we see the legislation.”
However, he advised against relying on the High Court to protect WA’s rights, following several defeats of cases brought by the state in recent years.
“Never put your money on the High Court to look after WA,” he said.
Mr Moore’s confirmation of a possible legal challenge came as Prime Minister Kevin Rudd ruled out any early offer of a compromise on the structure of the tax.
“We don’t expect to land any agreement with mining companies soon,” he said. “This is going to be quite a long and protracted negotiation.”
Mr Rudd is under heavy fire for flouting his own political advertising guidelines to launch a $38 million taxpayer-funded advertising blitz to counter the industry’s attacks on the scheme.
The government advertising campaign has also been pilloried as misleading for its continued understatement of the total taxes and royalties paid by the mining sector.
