New Australian prime minister Julia Gillard has announced a compromise deal on the controversial resources super profits tax, ending a two month battle with industry.The renamed minerals resource rent tax features a headline rate of 30% - down from the 40
New Australian prime minister Julia Gillard has announced a compromise deal on the controversial resources super profits tax, ending a two month battle with industry.
The renamed minerals resource rent tax features a headline rate of 30% - down from the 40% proposed in the super tax – and will only apply to iron ore and coal projects.
The cut-in threshold for the tax has been raised just over 5% (the current long-term bond rate) to about 12% (bond rate plus 7%).
The existing petroleum resource rent tax of 40% will be extended to include all offshore and onshore oil, gas and coal seam methane projects.
Other commodities will not be included in the new tax regime. According to Ms Gillard, as reported in the Sydney Morning Herald, this will reduce the number of companies affected by the new regime from 2500 to around 320.
The new regime is scheduled to begin on July 1, 2012.
At a press conference in Canberra early this morning, Ms Gillard said the new regime would send a “very strong message to the world that the Australian resources sector is strong and its future is secure”.
Expected revenues from the new regime are $A1.5 billion less than those expected under the previously-proposed - and highly divisive - resource super profits tax proposal.
The super tax proposal is considered one of the factors that led to previous Australian Labour prime minister Kevin Rudd's fall from power in a party coup last month.
Today's announcement comes after a meeting between Ms Gillard and Rio Tinto, BHP and Xstrata executives yesterday evening in Canberra, following on from a day of negotiations conducted by Treasurer Wayne Swan and Resources Minister Martin Ferguson.
The new deal is expected to clear the way for Ms Gillard to call an early Australian election.
