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Miners Condemn Western Australia Tax Hike Proposal

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

11 August 2016


Brendon Grylls, the new leader of the Western Australian Nationals, has announced that his party will seek to hike the iron ore levy paid by Rio Tinto and BHP Billiton.

Grylls was unveiled as leader of the Nationals on August 9. The Nationals are the junior party in the state's ruling Liberal-National coalition.

Grylls said that the Nationals will aim to increase the production rental in the State Agreements with Rio Tinto Iron Ore (RTIO) and BHPB Iron Ore (BHP) from 25 cents to AUD5 (USD3.85) per tonne. According to Grylls, the State Agreements "are now out of date and do not reflect modern practices, including Singapore trading hubs, contracting, fly-in-fly-out workforces, and automation."

"It is unfair that this production rental that has existed in the original State Agreement has never been changed since it was created in the 1960s. The Nationals WA believe that the state and taxpayers have facilitated a huge expansion of the iron ore industry at great cost to our state budget and the big miners are not paying their fair share," Grylls explained.

The Nationals estimate that increasing the production rental to AUD5 per tonne would raise AUD7.2bn across the forward estimates period. Grylls argued that the measure would return the budget to surplus, "and give us scope to discuss new policy settings like a reduction in payroll tax for small and medium businesses to stimulate employment and new jobs."

The proposal was condemned by BHP. In a statement, it said: "We do not understand why a proposal that is so discriminatory and uneconomic would be targeted at two companies. Miners in Western Australia are operating in an international market and we have to be able to compete or [we] will lose market share."

The company's comments were echoed by Rio Tinto, which said that "there are no grounds for a new mining tax in Western Australia." Rio Tinto described the policy as "an ill-conceived tax grab," and warned that, if implemented, it would place jobs and the company's iron ore business at risk.

TAGS: environment | tax | business | mining | budget | Australia | Singapore | environmental tax | payroll | tax rates | tax reform

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