SUBMISSION TO TREASURY: Minerals Resource Rent Tax Repeal and Other Measures Bill 2013
The Minerals Council of Australia (MCA) welcomes the Government’s commitment to consult on the exposure draft Minerals Resource Rent Tax Repeal and Other Measures Bill 2013.
The MCA has consistently stated that the MRRT was unnecessary to ensure all Australians benefited from the Millennium mining boom. Coal and iron ore were among the highest taxed industries in Australia before the introduction of the MRRT with an average tax ratio in excess of 40 per cent over the five years from 2006-07. Even with repeal of the MRRT, Australia will remain a relatively high tax jurisdiction for coal and iron ore mining.
While the MRRT removed some of the more serious flaws in the original Resource Super Profits Tax (RSPT), the industry has never accepted the core propositions that underpinned the MRRT:
i) that the industry was not paying a fair share; and
ii) that the MRRT was necessary for all Australians to share in the benefits of the Millennium boom.
Repeal of the MRRT would boost industry confidence and send a powerful signal that Australia is not about to relinquish its place as a premier destination for investment and a cost competitive supplier of minerals resources.
The MRRT is an extra layer of tax on top of company tax and royalties. The mining industry has contributed $117 billion in company tax and royalty revenues since 2006-07. This does not include a range of other taxes. Additional taxes impact investment decisions and make Australian projects less attractive relative to projects in competitor nations. This in turn threatens investment, jobs and, ultimately, future taxation revenues.
The challenges facing coal and iron ore mining are of a different nature to those of mid-2010. The coal and iron ore industries confront the challenge of maintaining competiveness and profitability in the face of lower prices and high costs.
The debate and misguided rhetoric surrounding the RSPT and MRRT over the last three and a half years has undermined Australia’s sovereign risk standing in a highly competitive global market for resources development.
By removing an additional and unnecessary layer of tax, repeal of the MRRT will help restore industry confidence, reduce tax system complexity and improve Australia’s sovereign risk reputation. Australia can return to a focus on a competitive, stable tax system focused on the most pressing challenges to future growth in the industry which is to improve industry competitiveness and encourage investment.