Australia's Senate approved Australian Prime Minister Julia
Gillard's proposed minerals resource rent tax (MRRT) that will
soon collect a 30 percent tax from profits generated by the
country's mining giants.
The tax, which was approved Monday, starts rolling out July 1
this year with specific coverage on coal and iron ore mining
"Only super-profitable mining companies will pay the MRRT and
the proceeds will go to where they can make the greatest
contribution to jobs and economic growth," Gillard said in a
She said that as much as $3.7 billion (Australian) of revenues
will enter the federal coffers in the first year alone of the tax
and more will come as the federal government squeezes more juice
from a sector that has been shoring up Australia's economy even
when financial difficulties have been bearing down on other key
The government has pledged that more people will benefit from
the revenues spawned by the country's non-renewable resources as
Federal Treasurer Wayne Swan issued assurances that Australia
would "maximize the opportunities that flow from that boom and
spread them to every corner of our economy."
Next on his agenda is the passage of measures that would
provide tax relief to all businesses, Swan said.
"This important reform will provide a revenue stream to ensure
that businesses in particular that are not in the fast lane of
the resources boom get some tax relief," the treasurer was quoted
by The Associated Press as saying on Monday.
Delivering the tax breaks could prove difficult for Gillard as
the 38 senators who voted for the MRRT may not support government
initiatives that would allow small and big companies to enjoy tax
rate cuts from 29 percent to 30 percent.
The Australian Green Party, which voted with Labor in the
mining tax, had already indicated that it would only support tax
reductions for small businesses, insisting that savings to be
realized from big corporation tax breaks should instead be used
on government's health and education programs.
Opposition leader Tony Abbott has asserted that he would ditch
the tax once a Liberal government gets elected next year.
Abbott's coalition has maintained that the MRRT will lead to
thousands of job losses and will eventually drive away
investments, with experts noting that Australia's ongoing mining
boom has so far induced difficulties on other sectors of the
Gillard, however, remained unfazed and stressed on Monday that
"we continue to be determined to provide Australian businesses,
large and small, with a tax cut."
Also, a brewing confrontation with state and territory
governments over the mining tax could soon emerge as a number of
local governments consider hiking royalties on resources
extracted from their areas.
The governments of New South Wales, Queensland, Western
Australia and South Australia have all criticized the
implementation of MRRT, which would also mean that they would be
discouraged from increasing existing royalty taxes.
At present, royalties collected are based on volumes and not
on prevailing prices.
And if they insisted, Swan warned that states and territories
could face the possibility of a reduced share in the goods and
services tax (
), which is a policy, he clarified, that will be determined by
the review being conducted on GST's terms of reference.