Australian Mining Tax Puts Budget at Risk
June 26, 2012 Taxation in Australia
CANBERRA – Australia’s upcoming Minerals Resource Rent Tax may only raise half of the revenues forecasted by the government, putting the country at risk of not reaching a budget surplus in the planned time frame.
On June 25th a new report was released by the Minerals Council of Australia, saying that collections of the upcoming Minerals Resource Rent Tax will be too volatile to accurately predict and the government could suffer large losses in revenues if international demand for minerals drops unexpectedly. According to the report, it is currently not possible to reliably estimate the revenues which could be raised from the collection of the mining tax, as the charge is will vary based on international commodity prices and exchange rates.
The report criticized the Australian government for claiming to have made an accurate forecast of collections of the tax, and also said that it was risky for the government to have already budgeted to spend all of the forecasted revenues.
The new report comes one day after a separate report was released by UBS Australia, indicating that the government might raise only half of the AUD 6.5 billion it expected to see from the mining tax. Explaining the findings in the report, an analyst from UBS said that the mining tax is a “volatile stream of revenue” but is intended to fund “a stable and growing series of government obligations”.
If revenues from the mining tax drop too far below expectation the Australian government may need to raise the rates of the taxes in the country, postpone spending on some planned government services or infrastructure upgrades, or break its own pledge to reach a budgetary surplus by the start of the 2013 fiscal year.
The Mineral Resource rent Tax is scheduled to come into effect on July 1st 2012.
Photo by wallyg