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“It is a profits-based tax. In other words, it is only paid when a profit level is reached,” Simon Crean, Minister for Regional Australia, said in an interview last week.
“Arguing that this [MRRT] is a failure based on the first three months is just ludicrous,” he said.
MRRT was never projected to raise revenue in the early part, because these mining companies are making massive investments in infrastructures, which are then tax-deductible, Crean said.
Lower commodity prices and a weaker global outlook are driving a write-down in tax revenue of almost A$22 billion ($22.8 billion) over the next four years, almost all from company tax and resource rent taxes, with a write-down of A$4 billion in 2012-13 alone, Wayne Swan, Australian treasurer, said on October 22.
The Australian government expects net revenue from the MRRT to fall short by A$4 billion over four years to A$9 billion, Swan said.
The MRRT came into effect on July 1, and will see iron ore and coal miners pay a levy of 30% on their profits.
Metal Bulletin’s 62% Fe Iron Ore Index fell 20.8% over the September quarter to $106.46 per tonne cfr on September 26.
Australia’s Mineral Resources Rent Tax failed to generate any revenue during the July-September period, the first quarter since its launch, due to “a big drop in commodity prices”.