Fin24

Australia's mining tax clears final hurdle

2012-03-20 10:49

Sydney - Prime Minister Julia Gillard on Tuesday defended a controversial tax on the country's mining boom after it was passed into law, saying the benefits would be spread to all Australians.

Legislation that imposes a 30% tax on the extraordinary profits of coal and iron ore miners passed the upper house Senate late Monday night by 38 votes to 32, with the government winning the key support of the Greens party.

"Australians know how important the mining industry is, but they also know that we can only dig up and sell the resources once," said Gillard.

"The Minerals Resource Rent Tax will deliver Australians with a fair return on the resources they own 100%.

"The Gillard government believes all Australians should share in the benefits of the mining boom, not just a fortunate few."

The tax is due to start on July 1 and is expected to generate Aus$11bn in its first three years, which the government will put towards funding infrastructure, pensions and tax cuts for small businesses.

It will kick in when a company makes Aus$75m per year in profit, a concession the Greens won to protect smaller miners - it had been planned to start at Aus$50m.

The Labour government originally wanted a 40% tax on all extraordinary profits generated by resources firms as the nation enjoys unprecedented demand for its vast mineral deposits, mostly from rapidly industrialising Asia.

But this was scrapped in favour of a 30% tax only on iron ore and coal super-profits after a furious and intense campaign from the powerful and wealthy mining industry, led by BHP, Rio Tinto and Xstrata.

Australia is the world's biggest exporter of the iron ore and coking coal used in steelmaking and the second-biggest exporter of thermal coal used in power stations.

The conservative opposition has vowed to repeal the tax if it is elected, with critics charging that it will increase sovereign risk and will drive investment overseas.