AUSTRALIA’S controversial mining tax was on the way to the scrap heap yesterday, after having been in place for only two years. The Liberal government, led by Prime Minister Tony Abbott, won a vote in the Australian Senate backing a repeal.
The vote in the Senate, by 36 to 33, represents a significant political victory for Abbott, who said the levy was “possibly the most stupid tax ever devised”. As the burden eased from mining companies in the country, shares across the sector rose yesterday.
The Minerals Resource Rent Tax (MRRT), instituted by the previous Labour government in 2012, levied a 30 per cent tax on profits from the mining of coal and iron ore.
However, the tax had a troubled history, and faced major opposition from many mining companies, which argued the tax would hit investment and growth in the sector.
In July, BHP Billiton chief executive Andrew Mackenzie said his company was “very strong in wanting to see the repeal of the MRRT”, adding that the tax was “destroying huge amounts of potential inward investment, that ultimately will pay a lot more tax in a much more stable way to actually pay for services”.
Yesterday, Rio Tinto chief executive Sam Walsh said in a statement “We strongly support the repealing of the mining tax, and believe this will be a positive step for investment and good for jobs in the mining sector.”
The tax also generated just a fraction of expected revenues, with only A$126m (£70m) of the expected A$1bn raised in the first six months after it was introduced. This came at a time when the mining sector was hit by a huge drop in global commodity prices.
The scrapping of the mining tax follows the repeal in July this year by Abott’s government of Australia’s carbon tax, introduced by Labour to combat global warming but blamed by critics for rising energy bills.
The mining tax repeal bill will now move to the House of Representatives, where it is expected to have a smooth passage.