The Henry Tax Review’s ‘Super Profit Tax’ on mining has put up to $100 billion worth of projects in jeopardy the Queensland Resource Council (QRC) says.
The new resource rent tax at 40% will be phased in from July 2012, but will be offset by a credit from the Federal Government for state royalties for the same operations.
QRC chief executive Michael Roche believes the ‘super profit tax’ will put more than $100 billion of projects under risk in the state.
“The Federal Government’s really taking a bit of a gamble – it’s rolling the dice on more than $100 billion worth of resource sector projects in Queensland that are still waiting a final go ahead,” he said to the ABC.
“We’re surprised the Federal Government has decided to retrospectively apply a new tax to existing projects.”
“That’s of course where the quick dollars will come by further taxing the existing projects, so there’s no doubt that’s all about getting extra revenue through the door and it will severely the economics of the existing projects.” Mr Roche said.
BDO Corporate Tax Director Russell Garvey said the imposition of a 40% Resources Rent Tax proposed by the Federal Government risked undermining the competitiveness of Australia’s mining sector in the global marketplace.
However, Mr Garvey, who specialises in mining taxation, said that the Resource Exploration Rebate proposed for small exploration companies represents an improvement to the status quo and the proposed ‘flow through share scheme’.
Queensland Treasurer Andrew Fraser was on the defensive over the ‘Super Profit Tax’ but was pleased the tax will not affect state royalties, owing to the rebate payable from the Federal Government.
“The key test for us was Queensland to be no worse-off – we aren’t worse off under these arrangements,” he said.
“We keep the royalty regime – that was the first test and we’ve passed it.”
