Federal Treasurer Wayne Swan is playing down speculation the government is preparing to tax mining companies $5 billion a year with a resources rent tax, once the Henry Tax Review is released.
“Let’s not have hysterical short-term reactions to speculation which is probably inaccurate in the press,” Mr Swan told Sky News in Washington where he attended a meeting of G20 finance ministers.
Many mining companies exporing Australian resources to the world- including the big ‘Australian’ firms BHP and Rio Tinto, are actually majority foreign-owned.
The plan to impose a new national resource rent tax, to be collected by the commonwealth, has been widely tipped to be part of the federal government’s response to the Henry tax review.
The review and the government’s response to it will be published on May 2nd.
Despite tax breaks for mining companies, executives complained to the Weekend Australian that a federal resources rent tax on top of the $7 billion already paid in state royalties was the “worst-case scenario” and a “thermo-nuclear option” that could stop projects going ahead or limit expansion.
Under Henry’s model, state royalties charged on production rather than profits would be replaced by a national system kicking in once profits hit a certain level.
But the argument that competitiveness could be affected is the same one that garnered concessions under the emissions trading scheme.
The review, carried out by Treasury secretary Ken Henry, is believed to recommend the rate be set at 40 per cent of mining industry profits and replace state royalties.
Only a few weeks ago, the Green party suggested the rate should be set at 50 per cent.
Mr Swan said he would not speculate what may or may not be in the Henry review or the government’s response.
“Many of the articles that have been written are simply inaccurate.”