Australia’s Mining Provides No New Revenue

October 26, 2012 Taxation in Australia

Sandvik DI600 (Titon) DTH DrillCANBERRA – Australia’s controversial mining tax has hit a major hurdle, as allegations arise that it will not provide any tax revenues at all.

Over the course of the week accusations have surfaced in Australia that the country’s new Minerals Resource Rent Tax (MRRT) has not resulted in any increase to government tax revenues in the three months since it was instated and the situation may not improve during the rest of the year.

On October 22nd the government cut its forecasts for the revenues which would be raised from the MRRT in the 2012 fiscal year from AUD 3.7 billion to AUD 2 billion.

Within days, on October 24th, the Australian media published new analysis concluidng that the country’s three biggest mining companies were not liable to pay any tax under the MRRT system for the first quarter of the year, and accusations arose that the tax would not lead to any tax revenues for the remainder of the year.

At a press conference held in Brisbane on October 25th the Australian Treasurer Wayne Swan defended the tax, saying that an official tally of how much revenues were raised through the system would be revealed in December.

He also retaliated against the claims that the tax would not raise adequate revenues throughout the year, saying that the government’s forecasts are calculated for the entire fiscal year and “…you can’t take one particular quarter and claim that as representative of the whole year.”

Wayne Swan also emphasized that the tax liabilities under the MRRT are based on the profits of the mining companies, which cannot be expected to stay at the same level throughout the year, due to fluctuations in international commodity prices and variations in demand from Australia’s trade partners.

Despite the Treasurer’s defense, the government is still facing intense criticisms for implementing the tax, with the shadow Treasurer of Australia Joe Hockey saying “…I have never heard of a tax that doesn’t raise a dollar,” and “…this is a new benchmark in public policy.”

Photo by rocbolt