A successful Australian mining sector means a stronger Australian economy.
A competitive tax system is critical for investment in capital-intensive industries such as mining. Mining projects involve high-risk exploration outlays, large upfront capital commitments, long-life assets, sophisticated technologies and long lead times to profitability.
Competition from other resource-rich economies to capture future opportunities in resource development is intense.
Stable fuel tax arrangements are also vital to mining’s competitiveness.
Australia’s world-class mining sector doubled its contribution to funding for roads, schools, hospitals, police and other essential services on which Australians depend between 2015-16 and 2016-17 through a massive increase in company tax and royalty payments.
Research by Deloitte Access Economics reveals that Australian mining companies paid $12.1 billion in company tax in 2016-17 – almost four times as much as 2015-16, the highest since the mining investment boom in 2011-12 and more than the Australian Government spent on the Pharmaceutical Benefits Scheme.
This means that mining companies are estimated to have paid one in every five dollars of Australia’s company tax take.
Mining companies also paid $11.2 billion in royalties in 2016-17, providing total revenue to Commonwealth and State Governments of $23.3 billion in company tax and royalties in 2016-17 – double the previous year.
In total, mining companies paid $203.6 billion in company tax and royalties in the 12 years between 2005-06 and 2016-17.
The increase in royalties follows a significant investment in new production over recent years, which is delivering a strong dividend to the states from royalties which are based on production.
The increase follows a previous study from Deloitte Access Economics released in January 2018 which showed mining companies paid an effective tax rate of 51 per cent in 2015-16 in company tax and royalties – the second-highest tax ratio recorded since the survey began nine years ago.
Increased payments from mining companies in company tax and royalties provide governments with increased revenue to fund infrastructure and essential public services.
For example, the $23.3 billion paid by mining companies in company tax and royalties in 2016-17 is almost as much as the Australian Government spent on schools and road and rail infrastructure in the same period.
MCA members are committed to enhancing transparency of their activities and relationships with governments and host communities as part of the industry’s commitment to contribute positively to long term social and economic development.