The latest Minerals Industry Tax Survey shows that in 2012-13 the minerals industry paid nearly half of every dollar of profit as royalties and company tax to State and Federal Governments in Australia.

Conducted jointly by the Minerals Council of Australia and Deloitte Access Economics, the survey finds the tax take ratio in that year was 47.1 per cent. This is the highest recorded level since the tax survey was inaugurated, with an average tax take ratio of 42.5 per cent across six years of survey data from 2007-08 to 2012-13.

This is the third consecutive year in which the tax burden on the industry has increased, reflecting large falls in commodity prices and mining industry profitability, as well as increases in royalty rates levied by key mining States. Further falls in commodity prices since mid-2013 mean the tax ratio is expected to have risen again in 2013-14 (which will be assessed in next year’s survey).

Australia is already a high tax mining jurisdiction in a fiercely competitive global marketplace. These results demonstrate the acute tax competitiveness challenge that confronts Australia’s minerals industry amidst weaker business conditions.

Governments at all levels – State and Federal – need to take a long-term view that prioritises industry growth as the vehicle for delivering higher revenues over time. No longer can this industry be seen as a honey-pot for short-term revenue raids.  This is a key message the industry will deliver to the inquiries into tax reform and the Federation being undertaken by the Abbott Government.

The total tax ratio refers only to royalties and company tax. It does not include a range of other taxes, charges and levies paid by the minerals industry, including the Minerals Resource Rent Tax and the carbon tax which were also levied in 2012-13.

Compared with a decade ago, total mineral royalties and company tax payments from the industry have almost trebled as a share of GDP.  Recent estimates from Deloitte Access Economics are that revenues from royalties and company tax combined totalled $156 billion over the decade to 2013-14.

The 2014 survey covers an estimated 84% of industry revenues. In total, 24 companies participated in the survey.  The report is available at http://www.minerals.org.au

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