Treasury Secretary Supports Australian Super Mining Tax

12 May 2010 (Last Updated May 12th, 2010 18:30)

The Australian Government’s proposed super profit resource tax will boost the mining industry and economy, according to Australian Treasury Secretary Ken Henry. The 40% tax, proposed last week, has generated widespread criticism from resource companies including BHP Billiton and Rio Tint

The Australian Government’s proposed super profit resource tax will boost the mining industry and economy, according to Australian Treasury Secretary Ken Henry.

The 40% tax, proposed last week, has generated widespread criticism from resource companies including BHP Billiton and Rio Tinto, which warned they will force projects offshore if the government goes ahead with it.

Henry told Bloomberg the released modelling and tax package clearly demonstrates that a resource tax will help the mining sector in Australia, however, to grow, along with the economy.

The tax is due to be implemented in 2012 and can earn $10.8bn in its first two years.

The government said it will use revenue from the tax to cut company tax, boost retirement benefits and create a A$5.6bn ($5bn) infrastructure fund for Australia.

Australian Treasurer Wayne Swan yesterday accused miners of conducting a fear campaign over the tax.

They say that if implemented, it could reduce earnings significantly.

BHP said it could lose 17% of its yearly earnings while Rio believes it could reduce profits by 21% in 2013 alone.

Australia is the world’s biggest exporter of iron ore, coal and alumina.