Belfast Telegraph

Home News World

Australian PM drops mining tax

Australia's government has dropped plans for a 40% tax on booming mining company profits, defusing a damaging row with big business and clearing the way for national elections to be called at any time.

Mining companies had campaigned hard against the proposed tax, and it was a key factor in the sudden ousting of Kevin Rudd as prime minister after he refused to negotiate.

The announcement from new Prime Minister Julia Gillard effectively removes the issue from the political agenda.

Opinion polls showed an immediate boost for the ruling Labour Party when Ms Gillard took office, and she may choose to capitalise on that popularity by calling elections as soon as this weekend. Elections must be called by the year's end.

"The breakthrough agreement keeps faith with our central goal from day one: to deliver a better return for the Australian people for the resources they own and which can only be dug up once," Ms Gillard said.

The new deal replaces a so-called "super profits tax" of 40% with a profits-based minerals resource rent tax of 30% that will affect about 320 companies, down from the 2,500 that fell under the original tax proposal.

It will apply only to the iron ore and coal industries - Australia's biggest exports - and would begin in 2012.

The new resources tax will reduce revenues by an estimated 1.5 billion Australian dollars (1.27 billion US dollars) over four years compared to the previous proposal of nine billion Australian dollars.

To offset the loss in revenue, the government will reduce the broader company tax rate to 29% from 30%, instead of 28% as originally planned, Ms Gillard said.

This would mean that the goal of bringing the budget back into surplus by 2013 would remain on track.

Popular

From Belfast Telegraph