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(STICKY) (LUSAKATIMES, MINING WEEKLY) Australia to impose a 40 percent tax on resource profits from 2012

Zambia: Australia to impose a 40 percent tax on resource profits from 2012
Monday, May 3, 2010, 22:03

Australia will impose a 40 percent tax on resource profits from 2012 and raise A$12 billion ($11.1 billion) in its first two years. Prime Minister Kevin Rudd, preparing for an election within a year, said the changes will help the government pay for additional hospitals, retirement benefits and company tax reductions.

Prime Minister Kevin Rudd, in a pitch likely to strike a chord with voters, said Australians had been shortchanged during a 10-year resources boom in which profits soared by A$80 billion, while only A$9 billion extra flowed into national coffers.

“BHP is 40 percent foreign owned, Rio Tinto is more than 70 percent foreign owned. That means these massively increased profits … built on Australian resources, are mostly in fact going overseas,” Rudd told Australian radio.

The government has picked a fight with the country’s most important single industry, which accounts for about half of exports, in a gamble that taking money from rich miners and using it to boost workers’ pension funds will prove a vote-winner.

Prime Minister Kevin Rudd, in a pitch likely to strike a chord with voters, said Australians had been shortchanged during a 10-year resources boom in which profits soared by A$80 billion, while only A$9 billion extra flowed into national coffers.The hugely profitable iron ore industry, dominated by Rio Tinto and BHP Billiton, is seen as most vulnerable to the new tax.

Rio Tinto, the second-largest iron ore miner behind Brazil’s Vale and ahead of BHP in third, said new tax sent a bad signal to investors. UK-based miner Xstrata agreed.

Mining giant BHP Billiton announced disappointment with the plan, saying its effective tax rate on profits earned from Australian operations would increase from 43 percent to around 57 percent from 2013.

The company said that the mining resources in Australia contributed 18 percent to the country’s gross domestic product, with much of the profit put back into infrastructure projects.

BHP Billiton Chief Executive Officer Marius Kloppers said in a statement that a favorable tax environment was needed to make the Australian resource industry attractive.

“If implemented, these proposals seriously threaten Australia’s competitiveness, jeopardize future investments and will adversely impact the future wealth and standard of living of all Australians,” he said.

[Mining Weekly]

Labels: KEVIN RUDD, MINING, TAXATION, WINDFALL TAX

posted by MrK @ 8:19 PM