Resource super profit tax - Iron ore to bear bulk of tax

Friday, 11 Nov 2011

The vast bulk of the revenue raised by the mining tax will come from iron ore miners, as the row between Canberra and Fortescue Metals intensified.

Treasury officials said the iron ore industry dominated by BHP Billiton, Rio Tinto and Fortescue would pay about 75% of the AUD 11.1 billion that the tax is set to raise in its first three years, while coal miners would pay the remaining 25%

The projections came as the row between the government and smaller miners intensified, with juniors saying the tax would unfairly favour the big players.

A Fortescue executive, Mr Julian Tapp said the government had been ''sold a pup' and generous concessions to the big miners meant the tax would only raise a fraction of its intended revenue.

Although Treasury has slammed the modelling supporting Fortescue's claim, Mr Tapp tried to deflect this criticism by calling on the government to reveal the assumptions it used to design the tax.

He told government MPs in Canberra that ''If you have a problem with our credibility then why don't you refute it by getting Treasury to show us their model?.”

The government is refusing to release these assumptions, saying they were provided by BHP, Rio and Xstrata in confidence.

The opposition, which has vowed to repeal the tax if it wins government, said that the revenue projections for the mining tax do not stand up to public scrutiny.

Fortescue has not yet paid corporate tax and the company does not expect to pay significant amounts of mining tax in the early years of the levy.

However, Mr Tapp said the company was motivated by the damage the tax would do to smaller miners, which it expects to be major users of its infrastructure.

(Sourced from www.theage.com.au)