PERTH (miningweekly.com) – The Minerals Council of Australia (MCA) believes Australia’s complex system for sharing nearly A$60-billion in goods and services tax (GST) revenues between the states and territories is broken, as evidenced by the fact that Western Australia loses more GST than it collects in iron-ore mining royalties.
Western Australia is budgeting to collect A$4.38-billion in iron-ore royalties in 2017/18; however, under the Commonwealth Grants Commission’s (CGC) assessment of mining revenues, A$4.52-billion in GST funding will be taken away from Western Australia this financial year.
On average, iron-ore royalties between 2013/14 and 2015/16 reached A$4.3-billion in Western Australia, while some A$4.5-billion in GST was taken away from Western Australia, over the same period.
Australia’s iron-ore exports were value dated about A$47.8-billion in 2015/16, with the sector contributing A$43-billion to Australia’s gross domestic product within the same period.
In its submissions to the Productivity Commission inquiry on horizontal fiscal equalisation, the MCA noted that states that develop their minerals sectors are being penalised, while states that discourage mining development are being rewarded.
“That’s why the MCA is proposing the mining revenue assessment’s impact on the GST distribution be discounted by 25%. This reform would continue to deliver on the system’s goal of ensuring Australians have access to decent public services while encouraging, rather than discouraging, economic development,” the industry body said.
“It’s a necessary reform to restore fairness and equity to the GST distribution.”