The Western Australia state government said that Ms Julia Gillard’s PM of Australian, tax on iron ore and coal company profits is illegal because it limits state governments’ ability to finance development.
Western Australia said that the structure of the Minerals Resource Rent Tax, implemented July 1st, offsets any reduction in state taxes, inhibiting states from offering tax breaks to companies agreeing to finance development in remote regions. Its December 21st filing to the High Court of Australia was made in support of a challenge by Fortescue Metals Group Ltd that the regulation is unconstitutional.
The state in the filing said that “Because of the remoteness of commercially viable deposits of iron ore in Western Australia, the development of iron ore mining projects in these locations requires that the state work with iron miners to facilitate construction of the infrastructure. Such infrastructure includes town sites, railways, roads, airports and ports.”
Treasurer Mr Wayne Swan said that Western Australia, the center of the nation’s iron ore mining activities, joins Queensland in backing Fortescue’s lawsuit seeking to have the tax declared invalid. Gillard’s Labor government implemented the mining tax in a bid to boost revenue and return the federal budget to surplus by next year, when an election is due. Falling revenue now makes a surplus unlikely this fiscal year.
The government’s agenda has drawn criticism from mining companies, state governments aligned with the Liberal-National opposition and billionaire Ms Gina Rinehart, Asia’s richest woman.
Mr Swan said that Queensland’s challenge will try to stop the Ms Gillard government spreading the benefits of the mining boom to hundreds of thousands of Queensland households and small businesses who aren’t in the fast lane of the nation’s economy. At that time, he described the state’s legal bid as futile.
According to the filing, Western Australia received AUD 1.81 billion in royalty income from the mining of iron ore in the 2009-10 fiscal year and AUD 3.65 billion the following year.
The filling added that the amounts respectively accounted for 78% and 87% of total mineral royalty payments to the state in those years. The payments were 8% and 15%, respectively, of the state’s general revenue in the two years.
