A top mining executive has warned the industry's global competitiveness
is at stake amid claims it should pay more tax, as a new survey shows
the combined tax take on resources companies surged towards 50 per cent
in 2012-13.
The tax take on the mining industry – company tax and royalties – jumped
to 47.1 per cent of pre-royalty profits in 2012-13, the highest in the
six years covered by the survey. It was 43.2 per cent the previous year.
The take is heading higher because minerals price plunges and state
royalty hikes have continued since 2013, predict the survey authors, the
Minerals Council of Australia and Deloitte Access Economics.
Phil Edmands, managing director of Rio Tinto Australia, said
corporations and miners especially were "usual -suspects" in the quest
by governments for more revenues to plug stubborn budget deficits.
"But really, you do need to ask the question, 'what is a reasonable
amount of tax to pay and what is competitive'?" he said. "You can't
ultimately degrade the competitiveness of the country simply by taxing
more and more because there is some profit left.
"
Mr Edmands said the total tax take found by the rate was in line with
Rio Tinto's global tax rate in 2012-13, while the company's tax take in
Australia – where it pays the vast bulk of its taxes – would have been a
little bit higher.
He said this was a fair amount of tax but it was high relative to
competitors, and any further increases would handicap Australian miners
in the global battle for investment capital.
"That is fair and that is reasonable, and given that it is actually high
¬compared to competitors, there's not really scope for increased
taxation,"
Mr Edmands told Fairfax Media.
The 47.1 per cent tax take found by the latest minerals industry tax
survey for 2012-13 includes corporation taxes and state royalties. It
compares with an average 42.5 per cent rate over the six years since
2007-08 and a low of 39.8 per cent in 2010-11, the year ¬industry
profits peaked.
The survey of 24 companies covering about 84 per cent of mining income
does not include the mining tax and carbon tax. These were enacted by
Julia Gillard's Labor government and repealed by Tony Abbott's Coalition
government this year.
State royalties are levied on revenues rather than profits. Unlike
corporation taxes, royalties increase as a percentage of profits as
mineral prices and profits fall, but they fall as a percentage in
¬rising minerals markets such as the five boom years to 2008-09.
Western Australia raised its iron ore royalty rate in 2012 and again in
2013. Queensland raised its coal royalty rate for coal sold at $100 a
tonne or more in 2012. Royalties as a share of pre-royalty profits
jumped to 24.4 per cent in 2012-13, from a low of 13.9 per cent in
2010-11.
Minerals Council deputy chief ¬ executive John Kunkel said the overall
tax take had been pretty high and stable for most of the six years
covered by the survey period.
But it was now pushing up towards 50 per cent, a rate at which things become "uninvestable".
He said there was some global evidence that once you get to that point,
"it's very hard to attract investment in the competitive global regime".
"The government has a tough job on the fiscal side but you can't ignore
the [issue of] structural competitiveness as well," Mr Kunkel said.
Rio Tinto paid $US5.7 billion ($6.9 billion) in Australian corporate
taxes and mining royalties in 2012-13, and $US1.1 billion in the US,
mainly payroll taxes.
A top mining executive has warned the industry's global competitiveness
is at stake amid claims it should pay more tax, as a new survey shows
the combined tax take on resources companies surged towards 50 per cent
in 2012-13.
The tax take on the mining industry – company tax and royalties – jumped
to 47.1 per cent of pre-royalty profits in 2012-13, the highest in the
six years covered by the survey. It was 43.2 per cent the previous year.
The take is heading higher because minerals price plunges and state
royalty hikes have continued since 2013, predict the survey authors, the
Minerals Council of Australia and Deloitte Access Economics.
Phil Edmands, managing director of Rio Tinto Australia, said
corporations and miners especially were "usual -suspects" in the quest
by governments for more revenues to plug stubborn budget deficits.
"
But really, you do need to ask the question, 'what is a reasonable
amount of tax to pay and what is competitive'?" he said. "You can't
ultimately degrade the competitiveness of the country simply by taxing
more and more because there is some profit left."
Mr Edmands said the total tax take found by the rate was in line with
Rio Tinto's global tax rate in 2012-13, while the company's tax take in
Australia – where it pays the vast bulk of its taxes – would have been a
little bit higher.
He said this was a fair amount of tax but it was high relative to
competitors, and any further increases would handicap Australian miners
in the global battle for investment capital.
"That is fair and that is reasonable, and given that it is actually high
¬compared to competitors, there's not really scope for increased
taxation," Mr Edmands told Fairfax Media.
The 47.1 per cent tax take found by the latest minerals industry tax
survey for 2012-13 includes corporation taxes and state royalties. It
compares with an average 42.5 per cent rate over the six years since
2007-08 and a low of 39.8 per cent in 2010-11, the year ¬industry
profits peaked.
The survey of 24 companies covering about 84 per cent of mining income
does not include the mining tax and carbon tax. These were enacted by
Julia Gillard's Labor government and repealed by Tony Abbott's Coalition
government this year.
State royalties are levied on revenues rather than profits. Unlike
corporation taxes, royalties increase as a percentage of profits as
mineral prices and profits fall, but they fall as a percentage in
¬rising minerals markets such as the five boom years to 2008-09.
Western Australia raised its iron ore royalty rate in 2012 and again in
2013. Queensland raised its coal royalty rate for coal sold at $100 a
tonne or more in 2012. Royalties as a share of pre-royalty profits
jumped to 24.4 per cent in 2012-13, from a low of 13.9 per cent in
2010-11.
Minerals Council deputy chief ¬executive John Kunkel said the overall
tax take had been pretty high and stable for most of the six years
covered by the survey period.
But it was now pushing up towards 50 per cent, a rate at which things become "uninvestable".
He said there was some global evidence that once you get to that point,
"it's very hard to attract investment in the competitive global regime".
"The government has a tough job on the fiscal side but you can't ignore
the [issue of] structural competitiveness as well," Mr Kunkel said.
Rio Tinto paid $US5.7 billion ($6.9 billion) in Australian corporate
taxes and mining royalties in 2012-13, and $US1.1 billion in the US,
mainly payroll taxes.
This news story is reprinted from www.smh.com.au
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