Australian Government eliminates mine tax

14 May 2014 (Last Updated May 14th, 2014 18:30)

Australia Federal Treasurer Joe Hockey has announced the elimination of mine tax in the country.

Australia Federal Treasurer Joe Hockey has announced the elimination of mine tax in the country.

Speaking at the budget speech, Hockey said that the mining industry has given Australia its highest terms of trade in 140 years over the last decade.

"An amazing 80% of all investment in the recent mining and resources boom has come from new foreign investment in Australia," Hockey said.

"Mining and resources represent about 10% of our economy but only 2% of our employment."

"It has, however, done much of the heavy lifting over the decade. So now we need to fire-up the rest of the economy."

According to Hockey, the eliminated minerals resource rent tax would have generated around $3.4bn over four years.

"Mining and resources represent about 10% of our economy but only 2% of our employment."

For small miners, the budget provides $100m for mineral exploration for over four years. This will provide small miners, who do not make any taxable income, with access to a refundable tax offset for their Australian shareholders.

Additionally, the budget will provide $2.55bn funds over ten years under the Coalition's Emissions Reduction Fund for mining and resources companies to reduce pollution.

However, the elimination of mining tax is expected to affect big-earning mining companies, that will now have to pay higher taxes.

The Minerals Council of Australia CEO Brendan Pearson said the budget spreads the fiscal burden.

"We've got $3.7bn in new tax charges, which will primarily hit the mining sector. They relate to changes to exploration deductibility, costs of mining rights, new research and development requirements and a revision of the thin capitalisation ratio," Pearson said.

The council said that the $460m investment reduction in low emissions coal technologies, including carbon capture and storage, is disappointing.

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