Mining Companies To Pay Extra 40 Per Cent Tax
The Australian government is proposing a new 40 per cent tax on the profits of resource companies.
Shares in mining companies fell after Prime Minister Kevin Rudd announced on Sunday that the tax would be introduced in 2012, raising $A9 billion a year in government revenue. The income would be used to finance economic reforms and would shore up state retirement pensions. In return corporation tax would be cut from 30 per cent 28 per cent.
Profits in mining companies have boomed in recent years on the back of increased demand from China and India.
Shares in mining companies fell sharply on the Australian Stock Exchange. BHP Billiton fell 3 per cent while Rio Tinto shares fell 4.3 per cent. Analysts suggested that the new tax could scupper plans by the two companies to controversially merge their iron ore operations in the Pilbara region of Western Australia.
BHP Billiton said the measure would raise the total effective tax rate on the company's profits from 43 percent to 57 percent.
"These proposals seriously threaten Australia's competitiveness, jeopardize future investments and will adversely impact on the future wealth and standard of living of all Australians," BHP Billiton chief executive Marius Kloppers said in a statement.
BHP Billiton’s profits were $6.14 billion for the six months ending 31 December 2009, more than double that of a year earlier.
Rio Tinto's Australian managing director David Peever said the new tax would make the Australian mining industry the highest taxed in the world and less competitive.
Rio Tinto’s profits were $4.9 billion for 2009, up 33 percent over the previous year.
Mr Peever said Australia had been kept out of recession by the strength of its mining sector.
"But the same industry is now being portrayed by the government as not paying its way," he said in a statement.
The opposition Liberal Party said the move could kill Australia’s mining boom.
