Gurria Backs Australian Mining Tax

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

25 May 2010

Giving support to Australia's controversial new 40% tax on mining profits, Organization for Economic Cooperation and Development Secretary-General Angel Gurria, has said that the tax is one of "a number of preferred ways in which we like to see tax structures work."

The new tax, which, according to estimates, could raise about AUD12bn (USD11bn) in its first two years starting July 2012, is opposed by the major mining companies, who are threatening to cancel planned future investments if it goes ahead in its present form; BHP Billiton has repeated demands for the tax not to be applied retrospectively. The tax is set to become a major issue in the election later this year, with the opposition pledging to abandon the tax if elected.

"Whenever there is a bonanza, whenever there is a period in which there is a price spike or a price hike then it is legitimate for a sharing of that bonanza and that benefit, especially if there are ways in which that can be used to stabilize markets in the future," Gurria said on Australian radio.

In response to the question of whether the tax would deter investment, Gurria said "what drives investors is not necessarily that they are going to pay higher or lower tax but the availability of raw materials. If you look at these things strategically rather than with your sights on the profit of next year or next quarter, of course it's a wise thing to take the plunge, to… invest in Australia."

Recommended