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Oakeshott wants Treasury brief on mining tax

THE NSW independent, Rob Oakeshott, insists the government was ''done over'' in renegotiating the mining tax and has demanded a Treasury briefing to gauge the full impact of deductions granted to miners.

In a letter to the Prime Minister, Julia Gillard, Mr Oakeshott wants to know why Australia is foregoing such a large amount of revenue ''directly due to changes negotiated by your government with key stakeholders in the mining sector''.

He says the loophole which entitles miners to deduct from their mining tax liability all present and future state government royalties had the potential to minimise the tax that miners pay, rather than raise more.

''I remain concerned that allowing state-based royalties to be deductions only provides incentives for state governments to tax harder. The [mining tax] as negotiated has done more to minimise mining taxation than to make mining taxation more efficient,'' his letter says.

''I remain concerned at the rhetoric of 'spreading the benefits of the boom' from the mining industry to other sectors, when the actual benefits to those sectors appear to be far outweighed by the difficulties associated with a record exchange rate.

''Finally, I am concerned at [mining tax] receipts equating to just a third, at best, of what was originally proposed, and that this has significantly compromised the scope for pursuing other tax reform, education and disability measures.''


When reported two weeks ago that the mining tax, beginning on July 1, would make little or no revenue in its first three months, Mr Oakeshott joined the Greens in calling for the legislation to be returned to Parliament and some of the loopholes closed.

In June 2010, when Kevin Rudd was dumped as prime minister in the midst of a bitter battle with miners, the government hastily renegotiated the tax with industry giants BHP Billiton, Xstrata and Rio Tinto before calling an election.

The Resources Minister, Martin Ferguson, and the former BHP boss, Don Argus, led a group which, after the election, negotiated the Minerals Resources Rent Tax legislation which went to Parliament.

The government and miners blame a slump in prices for the lack of revenue so far from what is a profits-based tax, but others say renegotiated deductions are too generous and the government was hoodwinked.

The mid-year budget review forecast the tax would make $9.1 billion in its first four years. The Greens later released modelling which showed that the tax could make an extra $26 billion over the same period if the royalties loophole were closed, a key deduction reversed, and if the tax rate reverted from 30 per cent to 40 per cent.

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