Australian miners paid more than half of 2014/15 profits in tax
PERTH (miningweekly.com) – The Australian minerals industry faced an effective tax rate of 54.3% in 2014/15 – the highest burden for nearly a decade, new research by advisory firm Deloitte Access Economics has shown.
The Annual Tax Survey, commissioned by the Minerals Council of Australia (MCA), showed that more than half of the industry’s profits are paid to federal and state government.
“All things considered, the survey tells a pretty bleak story for the minerals sector in 2014/15. Relative to the year before, incomes fell while expenses rose, causing profits to fall by an estimated 76%,” the report stated.
The tax ratio has steadily increased since the turn of the decade, from around 40% in 2010/11, to 54% in 2014/15.
MCA deputy CEO David Byers pointed out this week that the tax ratio grew by 8% from 46.3% in the year to June 2015. The effective tax rate has increased markedly over the last three years and compares to an average rate of 44.4% over the eight years of survey data.
No other sector contributes such a share of its profit to state and federal governments.
“The report should provide a final nail in the coffin of the proposal by Western Australian Nationals' leader Brendon Grylls to increase tax on Western Australian iron-ore producers by as much as A$8-billion over the next four years.
“If the Western Australian Nationals want to retain any economic credibility in the lead-up to the state election they must ditch the proposal,” Byers said.
“The cold, hard reality is that Australia risks taxing itself out of global markets. Our company tax rate has been frozen in stone for 15 years while our competitors have lowered their rates.”
Australia's company tax rate is now 5 percentage points above the developed country average and 8 points higher than the Asian average.
Byer said that state jurisdictions had to be cognisant of the need to keep the overall burden of mining taxation comparable with international competitors.
“With profits low, royalties account for 60% of tax collections in 2014/15. The high share of royalties reflect the fact that royalties do not take account of the profitability of the sector which endured tough conditions in 2014/15.”
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