Mining Tax Passes Senate

The controversial Minerals Resource Rent Tax cleared the Senate late Monday night by a vote of 38 to 32, with the backing of the Greens. The legislation will impose a 30 per cent tax on the extraordinary profits of coal and iron ore miners, and aims to distribute the profits of the mining boom across less well-off sectors of the economy. It will come into effect from July 1, 2012. 

The Greens made a late, unsuccessful attempt to have the tax rate raised to 40 per cent – the same figure put forward by Kevin Rudd in his initial proposal in May 2010. Another proposed amendment by Greens leader Bob Brown to apply the tax to gold, uranium and rare earth minerals was ruled out of order by the Senate President. Under Section 53 of the Constitution, the Senate may not initiate a bill imposing taxation.

The 30 per cent tax rate was negotiated between Prime Minister Gillard and mining giants BHP, Rio and Xstrata, following the damaging public relations feud that erupted over Rudd’s initial proposal of 40 per cent. Smaller miners, however, remain unconvinced, with some feeling aggrieved that their competitors were exclusively invited to devise the tax.

Queensland mining magnate Clive Palmer had initially threatened to mount a High Court challenge, but later backed down, conceding that the tax would probably not affect him directly. However, Andrew Forrest, of Fortescue Metals Group, said yesterday that he had engaged senior counsel with a view to taking the matter to the High Court.  Opposition Leader Tony Abbott has vowed to repeal the tax if he wins government at the next election.

The government’s planned capital investment in mining is estimated to be $119.8 billion in the year to end-June 2013, which covers the first 12 months of the mining tax following its commencement on July 1. It plans to use the $11 billion generated by the tax over three years to raise compulsory superannuation contributions, fund infrastructure, and provide a 1 per cent tax cut to businesses. 

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