Minerals Resource Rent Tax
{{#badges: CoalSwarm |Navbar-Australiacoal}} The Minerals Resource Rent Tax (MRRT) is a proposed tax on profits generated from the exploitation of non-renewable resources in Australia.[1] It is the replacement for the proposed Resource Super Profit Tax (RSPT).
The tax, levied on 30% of the "super profits" from the mining of iron ore and coal in Australia, is proposed to be introduced from July 1, 2012.[1] The RSPT was initially announced as part of the initial response to the Australia's Future Tax System review, known as the Henry Tax Review, by theTreasurer of Australia, Wayne Swan and the then Prime Minister, Kevin Rudd. The tax is similar in concept, although different in operation, to the existing Petroleum Resource Rent Tax levied on off-shore petroleum extraction activities.
The RSPT was to be levied at 40% and applied to all extractive industry including gold, nickel and uranium mining as well as sand and quarrying activities. The tax was replaced by the MRRT following the appointment of Julia Gillard as Prime Minister of Australia in late June 2010.[2]
The controversy regarding the RSPT was such that an "ad war" between the government and mining interests began in May 2010[3] and continued until the downfall of Prime Minister Kevin Rudd in June 2010.[4] The Australian Electoral Commission released figures indicating mining interests had spent $22m in campaigning and advertisements in the six weeks prior to the end of the Rudd prime ministership.[5] Mining interests re-introduced the advertisments arguing against the proposed revised changes during the 2010 federal election campaign.[6]
On the November 23, 2011, the tax passed through the lower house with the support of the Greens.[7] The bill is scheduled to be debated at the Senate in 2012.[8]
Contents
Mining industry and political response
The response to the MRRT was mostly divided into supporter and opposition groups consisting of Federal government and opposition parties, lobby groups and the various stakeholders.
The tax was received support from the Australian Council of Trade Unions, mining unions such as the Construction, Forestry, Mining and Energy Union and conditional support from the Australian Greens. Unlike the RSPT[9], mining companies BHP Billiton and Rio Tinto Group have not publicly opposed the MRRT.
Those opposing the tax include the mining industry, resource and mining organisations such as Fortescue Metals Group, Xstrata and Hancock Prospecting, mining lobby groups and the federal opposition (Liberal Party and National Party).
Advertisements
Advertisements supporting or attacking the proposed tax ran on commercial television and in major newspapers. Funding for the mining lobby's advertisements came from the largest resource companies while funding for the Federal government's advertisements came from the consolidated revenue fund. Julia Gillard ceased the government's advertising after becoming prime minister and the mining lobby ended their ads shortly thereafter.
Effects and impacts
The tax was an issue in the Australian Labor Party leadership election of 2010, as a result of which Prime Minister Kevin Rudd was replaced by his deputy Julia Gillard. Soon after Gillard's appointment as Prime Minister, the Government reached an agreement with several of the largest mining firms on changes which were announced on July 2, 2010. Negotiations with smaller companies did not take place at this time.
The changes led to a reduction in the amount of revenue expected to be raised by the tax and offsetting reductions in the tax breaks the MRRT will fund, for example; the proposed company tax reduction was halved due to the reduction in revenue to be collected from the tax, along with reductions in other areas.
Levy
The proposed tax will be levied on 30% of MRRT assessable profit, where assessable profit is defined as assessable receipts minus deductible expenditure (including an MRRT allowance). The MRRT allowance is proposed to be set at the long term government bond rate plus 7% (700 basis points). Projects will also be eligible for a 25% extraction allowance, which reduces the effective statutory tax rate to 22.5%. State royalties will be deductible for MRRT purposes, and MRRT payments will be deductible for company income tax purposes.
Unlike the proposed RSPT system, the MRRT will not see the Commonwealth Government refund a portion of project losses.
Passing of the Bill
With the support of The Greens and independent MP Andrew Wilkie, the bill was passed in the House of Representatives on November 23, 2011. The bill is slated to be debated at the Senate in 2012.[8]
See also
References
- ↑ 1.0 1.1 "Full statement and detail of new mining tax" (2 July 2010). Retrieved on 2 July 2010.
- ↑ "RSPT v MRRT - the differences" (2 July 2010). Retrieved on 2 July 2010.
- ↑ Kevin Rudd defends mining ads: News.com.au 29 May 2010. News.com.au (29 May 2010). Retrieved on 2010-08-29.
- ↑ AAP. Mining stocks soar as RSPT ads axed: NineMSN 24 June 2010. Money.ninemsn.com.au. Retrieved on 2010-08-29.
- ↑ A snip at $22m to get rid of PM: SMH 2 February 2011
- ↑ 24 July 2010 12:00AM (24 July 2010). Miners launch new war on Julia Gillard's tax: The Australian 24 July 2010. Theaustralian.com.au. Retrieved on 2010-08-29.
- ↑ Hudson, Phillip (23 November 2011). Mining tax passes lower house after Julia Gillard, Greens strike deal. Herald Sun. Retrieved on 23 November 2011.
- ↑ 8.0 8.1 The Minerals Resource Rent Tax bill passed parliament just before 3am. The Australian (23 November 2011). Retrieved on 23 November 2011.
- ↑ Neil Sands (11 June 2010). "BHP calls for RSPT to be scrapped". Retrieved on 19 November 2011.
External links
Wikipedia also has an article on Minerals Resource Rent Tax. This article may use content from the Wikipedia article under the terms of the GFDL.
