Source: Reuters.com    Date: May 5, 2010

Australia's government has angered its booming resources sector by unveiling a new tax on mining projects from July 2012 under a sweeping pre-election tax overhaul which will also boost pension savings for workers. The government will also cut the company tax rate from 30 percent to 29 percent from mid 2013 and to 28 percent by mid 2014, and will refund state-based royalties currently imposed on mining projects. The new 40 percent Resource Super Profits Tax will hit big miners such as BHP Billiton, Rio Tinto, and Xstrata, and is set to raise about USD11 billion in its first two years.

"If implemented, these proposals seriously threaten Australia's competitiveness, jeopardize future investments and will adversely impact the future wealth and standard of living of all Australians," BHP Billiton chief executive Marius Kloppers said in a statement.

Treasurer Wayne Swan said the government expected strong opposition to its plan, from both the resources industry and conservative opposition parties, and would now consult miners on details of the new tax. "We are under no illusions about how difficult it will be to win support for this package," he said, adding support would never be unanimous. Swan said the new tax would help all Australians share the benefits of a prolonged mining boom which helped Australia avoid recession during the global financial crisis.

Swan denied the new mining tax would discourage investment, and said governments had only received about AUD9 billion extra from resource charges over the past 10 years, while resource profits were AUD80 billion higher. To further allay mining concerns, Swan said Australia would now also give mining companies a tax rebate to offset the cost of resource exploration from July 2011, in a move it said would benefit 4,300 companies. The government will also set up an infrastructure fund, with an initial payment of AUD700 million from 2012-13, to help pay for roads, ports, railways and utilities for resource industries.