Tax Pressure On Gillard Over Large Mining Profits

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

18 February 2011

The Australian Prime Minister, Julia Gillard, is currently refusing to back down on the 30% tax on mining profits despite BHP Billiton this week posting a record half-year profit of AUD10.6bn (USD10.6bn).

She is also facing fresh demands from the Greens to increase the threshold for the tax, after Greens Leader Bob Brown had seized on Treasury figures showing the mining tax would collect AUD60bn less over 10 years than former Prime Minister Kevin Rudd’s original 40% resource super profits tax.

Senator Brown said: "The big mining companies will effectively take AUD60bn out of Australian taxpayers' pockets as they gouge profits out of Australian soil and ship it offshore. BHP Billiton and Rio Tinto will export billions at the expense of Australians, giving away revenue that could fund services and infrastructure."

Gillard rejected the Greens' suggestions to go back to the original proposals and said she was not prepared to move on the MRRT. She confirmed that the government was aware of the projected lower income from the MRRT when it decided to use the new tax to fund cuts in company tax and measures to encourage more superannuation savings.

"We always understood that the mining tax, on the basis of profits, meant there would be years when there were high tax collections and years when there would be lower tax collections."

"Understanding the design of the tax, we made the expenditure decisions which use that revenue to make a difference to company tax rates, our pool of national savings through superannuation and help for small business," said the Prime Minister.

The Treasurer Wayne Swan also defended the revised tax, saying that the mining companies records profit vindicated the Government’s push for a tax on mining above state royalties and company taxes which are levied on profits. In last year’s tax return BHP paid AUD5.5bn to the Australian government in taxes and royalties.

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