Canberra - Australia's government has pitched to mining firms a compromise offer on a controversial tax, a newspaper said on Wednesday, in a move that could clear the path for new Prime Minister Julia Gillard to call an election.
The offer, tipped by media to be announced later on Wednesday, includes concessions to industry on the impact of the tax on existing projects, an increase in the level where the tax kicks in and an immediate write-off on new capital expenditure, the Australian Financial Review said without citing sources.
Based on the offer, Australia's fledgling liquefied natural gas sector would be a key winner, as it would be taxed under terms similar to the petroleum resource rent tax, which currently applies to offshore oil and gas companies, the paper said.
Prime Minister Gillard, who ousted Kevin Rudd last Thursday, has pushed for a rapid compromise with the industry over the 40% tax that was designed to raise A$12bn, because the row has damaged the ruling Labour's popularity just months before general elections.
Expectations are that shortly after Gillard reaches a deal with miners, she will call an early election to capitalise on her honeymoon period as new leader.
A Nielsen poll over the weekend, the first since Gillard took over, gave Labour a 55-45 lead over the conservative opposition, indicating an eight-point swing to the government.
Gillard defended the need for a mining tax on Wednesday, though she did not give any specific hints about a compromise.
"The difference with mining is the key resource is our (the people's) resource... and we have to price it properly because we only get to dig it up once."
The Australian Financial Review reported the compromise offer would involve resource firms losing some of their generous rebates and write-offs under the initial tax proposal, but is not thought to include a reduction in the headline 40% rate.
A spokesperson at the Treasury office declined to comment on the report of a compromise.
The proposed mining tax threatens more than $20bn in investment, according to angry mining companies, but no major project has yet been scrapped and several have actually been advanced since the tax was unveiled on May 2.
Mining industry groups suspended a hostile advertising campaign against the tax last week after Gillard promised to negotiate with the industry.
A mining industry source denied reports that the industry could restart the campaign soon if there was no compromise reached.
"As long as the government's working to get an outcome, as long as there's genuine negotiation, there won't be any more ads," said the source, who declined to be named due to the sensitivity of the talks.