SYDNEY – Australia on Tuesday agreed to scrap a contested resources profits tax after the government struck a surprise deal with crossbench senators, including mining tycoon Clive Palmer.
The Minerals Resource Rent Tax (MRRT) was introduced by the previous Labor administration in 2012, with a levy on annual profits above Aus$75 million (US$70 million) on iron ore and coal at a rate of 30 percent. It was intended to return a share of the spoils of Australia's decade-long mining boom to government coffers but was widely criticised after its revenues fell dramatically short of forecasts.
The mining tax is now gone, triumphant Treasurer Joe Hockey told parliament after the Senate, where minor parties hold the balance of power, voted 36 to 33 for its repeal, a key election promise of the Tony Abbott-led conservatives. It now heads to the lower house where it is guaranteed passage as the government has the numbers to push it through.
“We said we'd get rid of the mining tax; we've delivered in full,” added Hockey. “The tax package was so poorly designed, it was in fact costing the government billions of dollars each year.” The tax regime was initially watered down after a furious publicity campaign by BHP Billiton, Rio Tinto and Fortescue, which contributed to then Prime Minister Kevin Rudd being ousted by his deputy Julia Gillard in 2010 as opinion poll ratings plunged.