Competing interests continue to fight over the future of the Minerals Resource Rent Tax (MRRT)
Last week’s article The Minerals Resource Rent Tax (MRRT) — Will it be debated at next year’s tax summit? highlighted the confusion around the anticipated implementation of the federal government’s proposed Minerals Resource Rent Tax.
The proposed tax continues to draw vocal criticism from a number of quarters. Smaller mining companies have criticised the government for not consulting them on the design of the revised tax and instead negotiating only with the country’s three biggest miners, BHP-Billiton, Rio Tinto and Xstrata.
At a recent summit held by the Australian Agricultural and Resource Economics Society, prominent economists pointed out the flaws in the MRRT, describing it as “a patch-up” and “merely an exercise in buying time” and stating that it would undermine coal and iron ore exploration, distort investment and promote inefficiency.
The Business Council of Australia has also spoken out against the MRRT, arguing that no firm decision should be made until after the tax summit in June next year. Significantly, mining industry analysts have also cast doubt on the ability of the tax to generate the government’s projected $10.5 billion over its first two years, stating that the sum to be raised in tax revenue is more likely to be in the vicinity of $2 – 3 billion.
While Treasurer Wayne Swan continues to insist that he expects the MRRT to be in draft legislation form by the time of the tax summit, some within the mining industry point to independent Tony Windsor as the possible weak link in the federal government’s plans to implement the tax.
Any decision to delay the introduction of the MRRT until after next year’s tax summit would give the mining industry a significant reprieve, as the Treasurer is well aware. It is also undeniable that it would give the government some respite from the attacks it has endured from mining industry lobby groups in recent months.
On one hand, the government faces the prospect of a Senate controlled by the Greens, who are likely to push for the MRRT to be broadened to include other minerals, particularly uranium. On the other, any expansion of the tax could once again crank up the well-resourced anti-Labor publicity machine of the mining industry.
On any analysis, both the minority federal government and its proposed minerals resource rent tax seem to be facing an uncertain future.