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Australia: Fix Mining Tax, Australian Greens Say

Monday, 19 August 2013   (0 Comments)
Posted by: Author: Mary Swire
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Author: Mary Swire

"There is money to be had from fixing the mining tax right now," the leader of the Australian Green party has said.

Speaking to reporters in Hobart, Christine Milne stressed that there was "no use [in] Labor and the Coalition having a go-nowhere debate" on whether a Coalition government would hike the goods and services tax (GST) to fund a cut in the company tax rate. Stepping up her election campaign, Milne added that "most Australians are really fed up with the fact that there's almost an agreement between Liberal, Labor, and the big end of town – the mining industry – to not talk about the mining tax."

This is not strictly true, however, as Liberal leader Tony Abbott has pledged to scrap the Minerals Resource Rent Tax (MRRT) were the Coalition to win the September 7 general election. The party's manifesto claims that the MRRT "discourages investment by imposing very high effective tax rates on risky projects, while collecting little revenue – particularly after reimbursing States for their mining royalties."

Milne nevertheless alleged that both the Coalition and the ruling Labor party had been left "terrified" by "a major TV campaign" started by the mining industry against Prime Minister Kevin Rudd. "They made a determination there and then that they would accept the fact that the big miners would not have to pay a fair share," Milne added.

Australia's High Court recently dismissed a challenge to the MRRT by Fortescue Metals Group. Fortesque alleged that the levy, which applies to annual profits from mining activity of AUD75m (USD68.3m) or more, was unconstitutional, because only State governments can impose royalties.

The Labor party welcomed the court's decision, which was announced on the same day as the Government went into "caretaker" mode in anticipation of the election. The party said at the time that the MRRT "ensures Australians will receive a fair return from the nation’s iron ore and coal resources into the future. The MRRT is an important long-term reform for securing Australia’s future. As a profits-based tax, it responds to changing industry conditions, automatically collecting less revenue when profits are low and more revenue when profits are high."

The Treasury's Pre-election Economic and Fiscal Outlook (PEFO) estimates that proceeds from the MRRT will hit AUD2.5bn in 2016/17.

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