Australia's Mining Tax Could Be 'Unconstitutional'

by Mary Swire, Tax-News.com, Hong Kong

22 October 2010

An Australian Senate Committee has been told by the Australian Government Solicitor (AGS) that the previous Labor government, led by Kevin Rudd, had been warned that the proposed resources super profits tax (RSPT) could be unconstitutional.

It was disclosed that the AGS advised the Treasury that the government’s plan to introduce the RSPT in the mining sector could face opposition in the High Court. The grounds for such a claim could have been that it might have discriminated between states in Australia, by allowing unequal tax refunds or credits to be applicable for mining the same resource in different states.

The AGS is believed to have proposed changes to the RSPT in certain respects. However, the new Gillard government then, in July this year, replaced the RSPT with a new minerals resource rent tax (MRRT), applying only to iron ore and coal, and it is not now known what steps the government may have taken to overcome any constitutional obstacles.

However, a government spokesman has said that the MRRT will conform to the constitution, and that they are taking extensive legal advice in drawing up the relevant legislation.

Recommended