Fortescue Metals in the High Court: mining tax is unconstitutional

ABC News has reported that lawyers for mining magnate Forrest, the founder and major shareholder of Fortescue Metals, have argued before the High Court that the Minerals Resource Rent Tax, commonly known as the 'mining tax,' is unconstitutional. 

It’s the vibe of it, they say…

Just kidding! Lawyers for the Western Australian iron ore producer submitted to a full bench that the mining tax breaches the constitution because the structure applies the tax in a way that is discriminatory between states.  Under the tax, companies pay 22.5 per cent from iron ore and coal production revenues above $75 million, but can subtract any state royalties from that amount. David Jackson QC, who is representing Mr Forrest's enterprises, articulated that because state royalties can be deducted from the tax, it is effectively levied at different rates in different states.

Mr Jackson argued that a mining company's liability for the tax could be lowered by a few factors, including investment and infrastructure spending in addition to expenditure on state royalties.

"This is a case where the tax is directly calculated by reference to the amount of royalties," he said. "If you are a miner in state A which has a royalty rate of three per cent, you pay more MRRT than in another state where it's...say five per cent."

Fortescue Metals Group initiated proceedings against the Federal Government in the High Court in June last year. The Queensland and Western Australian governments are also parties to the case.

Read more here.

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