Wesfarmers Says Australian Tax Will Raise Sovereign Risk

16 June 2010 (Last Updated June 16th, 2010 18:30)

Australian coal-to-retail conglomerate Wesfarmers has said the proposed super profit resource tax will raise the nation's sovereign risk and could threaten dividends. The conglomerate said the tax will also make Australia less competitive in the global resources industry and could have

Australian coal-to-retail conglomerate Wesfarmers has said the proposed super profit resource tax will raise the nation's sovereign risk and could threaten dividends.

The conglomerate said the tax will also make Australia less competitive in the global resources industry and could have significant flow-on effects for the broader economy and society.

In a letter to shareholders, Wesfarmers chairman Bob Every said the consultation process with miners should be restarted and the tax completely revamped.

"The design and application of this tax will adversely affect sovereign risk in relation to investments in Australia," Every said.

Wesfarmers has three coal-mining operations, including the Curragh coal mine in Queensland.

Every said any threat to earnings is clearly a threat to the level of dividend a company can pay to the shareholders.

The proposed tax, to be implemented in 2012, has forced major mining companies to shelve more than $20bn of resource investment in Australia.