The report to the MCA forecasts that the tax would cause significant loss of value in investments and is “likely to result in mining companies deferring or cancelling Australian projects in the short to medium term”.
The government’s political standing and Mr Rudd’s leadership support has been rocked during the month-long dispute over the new profits tax on mining. The latest Newspoll surveys show Labor’s primary vote at just 35 per cent and more people opposed to the new tax than supporting it.
The MCA has run a series of advertisements accusing the government of misleading the public over the taxes miners pay and arguing the new tax would hurt all Australians. Wayne Swan has responded by calling the mining leaders liars or ignorant.
Mr Rudd said yesterday in parliament that “the bottom line is they can pay more tax” and the government would not accept “propaganda by the MCA”.
But the Prime Minister is preparing to meet individual mining leaders, who argue that the government’s process in introducing the tax has been faulty, that there has been insufficient consultation and that there should be detailed negotiations beyond the tax consultation panel headed by a deputy secretary of Treasury.
The government is insisting the proposed 40 per cent tax rate is non-negotiable but is prepared to consider other major concessions on the tax threshold, loss provisions and the exemption of quarry products.
“We believe this 40 per cent rate is right and we’ve said we will consult with the industry on detail and on implementation and on transition,” Mr Rudd said yesterday.
“That’s the framework in which we’re having these consultations and negotiations, but what I do know about consultations with very big – very big – mining companies who sometimes hunt in packs is that it’s far better that these negotiations are conducted direct rather than through the media.”
The Prime Minister also warned that the negotiations with the mining leaders would take a long time and that he refused to be held to any timetable in relation to the election, which is expected by October.
“Anyone out there expecting that there’ll be some magic deal at midnight tomorrow night is wrong,” Mr Rudd said in reference to the MCA annual dinner in Parliament House tonight.
“That’s not how it’s going to be. Furthermore, this is going to be quite a long and protracted negotiation over quite a long period of time. And there I speak of weeks, at least, if not beyond.
“I wish to emphasise that the government remains fully committed to a resource super-profits tax.”
Mr Rudd said the 40 per cent tax rate was fundamental, as was the commitment to be able to fund “other elements of tax reform as well”, such as small business and company tax cuts.
The RSPT is forecast to raise $9 billion in 2013-14 and is essential to the government’s projections for tax cuts, low-income earners’ superannuation concessions and return to budget surplus.
Tony Abbott said: “Mr Rudd’s great big new tax is not just something that’s going to impact on BHP and Rio. It’s going to impact on everyone who is doing something around his or her house.
“Everything that comes out of the ground is subject to Mr Rudd’s great big new tax. That means your sand, your gravel, it means everything that goes into the steel, the concrete, the roof tiles, all of this is going to be subject to Mr Rudd’s great big new tax and this is a tax on everyone.”
Resources Minister Martin Ferguson backed the Prime Minister’s claims saying: “Contrary to what the Leader of the Opposition is saying, this is not a tax on extraction. We should also not forget that the industry itself has argued for tax reform.
“What we’re about is bedding down the detail and putting in place certainty, which ensures that we get a fair return for the Australian community for their resources during the good times but I also remind you that during the bad times there is also some relief for the mining industry.”
The Treasurer said the government was not surprised that it was meeting “fierce resistance from some of the biggest companies in the country, and indeed, some of the biggest resource companies in the world”.
“It is naive for anybody to expect that it would be different because they will have to pay a bit more tax,” Mr Swan said.
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