Confusing and contradictory information is currently circulating
about the anticipated next phase of discussions of the Minerals
Resource Rent Tax (MRRT), the amended version of the Resource Super
Profits Tax which drew so much criticism under the government of
former prime minister Kevin Rudd.
While Independent Rob Oakeshott appears to be under the
impression that the MRRT will be debated at next year's tax
summit, due to be held before the end of June 2011 to discuss
options arising from the Henry review, Treasurer Wayne Swan has
stated that the MRRT will not be discussed as part of the forum.
According to Mr Swan, the Minerals Resource Rent Tax would be put
to Parliament in something similar to its current form.
While it seems clear that the government will need to implement
the MRRT to deliver its $10 billion promise to the independents of
increased services to rural and regional Australia, at this stage
there seems to be no certainty that the independents will
necessarily support the tax. The main points of the MRRT disclosed
so far are:
Limited to iron ore and coal companies whose resource profits
exceed $50 million per annum.
Current petroleum resource rent tax regime extended to all
onshore oil and gas projects, including coal seam gas.
A 30 per cent tax kicks in at the long-term bond rate plus 7
The tax will apply to the value of the resource, rather than
the value added by the miner.
Projects will be entitled to a 25 per cent extraction
Miners may elect to use the book or market value as the
starting base for project assets. A book-value starting base will
be uplifted with the long-term bond rate plus 7 per cent.
Existing projects will be brought into the regime.
States and territories will keep existing royalties, but the
federal government will provide companies with a refundable credit
for current state royalties paid. This is subject to further
consideration by a transition policy group headed by former
BHP-Billiton chairman Don Argus and federal Resources Minister
Martin Ferguson, if he stays in that role.
Resource exploration rebate to provide refundable tax of set at
the company tax rate will not be pursued, but exploration costs
will be deductible in the normal way.
Western Australia and Queensland to receive more than $2
billion each from a $6 billion regional infrastructure fund that
comes from the proceeds of the tax, although who knows if this will
stay now that so much has been promised to the independents.
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