Mining tax still in doubt as MP wavers

Andrew Wilkie: 'The depreciation provisions

... seem unfair to the smaller miners.' Photo: Alex Ellinghausen

LABOR'S bid to impose a mining tax on super profits is in fresh doubt, with one of the key MPs whose vote it needs to pass the legislation declaring he is ''still to be persuaded'' of its merits.

Key independent MP Andrew Wilkie is also considering moving an amendment to raise the threshold defined as a ''super profit'', in a move that could shave more revenue off the already compromised tax.

Clinching Mr Wilkie's support on the tax is vital for Labor, with fellow crossbench MPs Tony Crook and Bob Katter vehemently opposed to the plan. The other three crossbenchers are expected to vote for the tax in a bid to help cut the company tax rate.

The government intends to introduce the mining tax legislation when Parliament returns in coming weeks, but it is not expected to face a vote until next year after a committee review.

But Mr Wilkie is signalling he cannot be counted as a certain vote for the government, even though he favours the concept of a super profits tax. In recent months he visited Western Australia at the invitation of Mr Crook to meet smaller mining companies and hear their concerns first-hand.

''I am still to be persuaded that they have got it right,'' he told The Sunday Age of Labor's tax.

''My visit to WA confirmed my concerns for the mining juniors. The depreciation provisions in the MRRT [Minerals Resource Rent Tax] seem unfair to the smaller miners.''

The government wants to levy extra tax on iron ore and coal producers who clear more than $50 million a year in profit. The extra revenue to government would be used to cut the company tax rate from 30 to 29 per cent, helping other sectors of the economy that are struggling to survive because the mining boom has pushed up the Australian dollar and is drawing labour away from other industries.

The idea of a ''super profits'' tax was proposed in the tax review by former Treasury secretary Ken Henry. Labor's first plan was decried by the mining industry, which extracted a backdown and compromise from Julia Gillard in her first weeks as Prime Minister.

But smaller miners complain that the compromise deal struck with the three giants - BHP Billiton, Rio Tinto and Xstrata - disadvantages them because they don't have anywhere near the same value of assets to depreciate against their profits as the big companies.

Mr Wilkie said he was concerned at the level defined as a ''super profit'' in the draft laws.

''It still seems too low. I have no objection at all to a super profits tax, but what we have now is a hybrid mining or royalty tax. Somewhere along the way it has lost its way. What we have is a package that favours the big miners, it's a disincentive to the smaller miners. That worries me.''

But the key independent said the government was ''playing hardball'' and refusing to budge. ''Frankly, I don't want this to be a big problem between the government and myself. I would hope I could bring about some amendment that would address some of those concerns of the small miners,'' he said.

Association of Mining and Exploration Companies chief executive Simon Bennison said smaller mining companies wanted the $50 million super profits threshold lifted to $500 million and indexed.

Independent MP Tony Windsor said he had yet to consider the mining tax legislation in detail but he was in favour of the general principle of a resource rental tax - a rent on profit rather than a royalty on loss. ''I am not against the concept of sharing some of the boom times with those who aren't in the boom areas,'' he said.

Greens MP Adam Bandt said his party wanted the original super profits tax but ''we have made it clear we don't want to end up in the situation where there is no mining tax''.

Mr Katter said he was opposed to the tax because ''we are handicapping the only runner we have got''.

Authors: mining - Yahoo! News Search Results