Aus to hit miners with new tax

Sydney - Australia's government angered its booming resources sector on Sunday by unveiling a new tax on mining projects from July 2012 under a sweeping pre-election tax overhaul which will also boost pension savings for workers.

The government will also cut the company tax rate from 30% to 29% from mid 2013 and to 28% by mid 2014, and will refund state-based royalties currently imposed on mining projects.

The new 40% Resource Super Profits Tax will hit big miners such as BHP Billiton, Rio Tinto and Xstrata and is set to raise about A$12bn in its first two years.

"If implemented, these proposals seriously threaten Australia's competitiveness, jeopardise future investments and will adversely impact the future wealth and standard of living of all Australians," BHP Billiton chief executive Marius Kloppers said in a statement.

Kloppers said the changes would increase the groups effective tax rate on Australian earnings to 57% from the current rate of around 43%.
Investment bank UBS said predicted a sell-of of Australian mining stocks on Monday as investors digested changes, which could also send a chill through mining mergers and acquisitions.

"I think it's clearly negative for the big miners. I expect them to be down fairly materially," UBS chief strategist David Cassidy said.

Treasurer Wayne Swan said the government expected strong opposition to its plan, from both the resources industry and conservative opposition parties, and would now consult miners on details of the new tax.

"We are under no illusions about how difficult it will be to win support for this package," he said, adding support would never be unanimous.

Swan said the new tax would help all Australians share the benefits of a prolonged mining boom, fuelled by demand from China and India, which helped Australia avoid recession during the global financial crisis.

Australia faces elections in the second half of 2010, most likely in October, with Prime Minister Kevin Rudd ahead in opinion polls and seeking to win a second term in office.

The government says the changes will lay the base for a 10-year reform programme and won't seek to legislate for them until after the next election, when it could still face stiff opposition from a hostile upper house.

Conservative opposition leader Tony Abbott said he was strongly opposed to the new mining tax, which he likened to the government's shelved emissions trading scheme (ETS).

"I am deeply, profoundly hostile to the idea of a great big new tax, like the ETS, on the most important and productive part of the economy," Abbott told reporters, without confirming whether he would try to vote down any changes.

 - Reuters