TAX NEWS - JUNE 2010

Australia Tax: Rudd defends government's stance on the resources super profits tax

Outside the Sofitel ballroom in Brisbane's CBD on Friday, Clive Palmer's name tag sat on the table, alone and unclaimed.

Inside, at the Queensland Media Club lunch, Prime Minister Kevin Rudd launched a blistering attack on the colourful billionaire mining magnate as he defended his government's stance on the resources super profits tax.

But while Mr Palmer was not present to defend himself, he did have supporters in the room.

Queensland Resources Council chief executive Michael Roche said the figures were "there for everybody to see".

"Queensland's share of $12 billion of super profits tax is about $4.5 billion. Queensland's share of what will be funded from the super tax is $2 billion - it's very easy sums to do," he said.

"We stand by the numbers and we're happy to see any alternative analysis that shows Queenslanders not being ripped off."

Mr Roche said the Rudd Government had not consulted widely enough before announcing the new tax system in the wake of the Henry Review.

"The resources sector has always supported a profits-related resource tax regime," he said.

"We're not fans of the current state royalties system, which is not geared to profits, so we've been open to reform but we're not open to punitive taxes that drive business overseas."

Mr Rudd said all he wanted was a "fair share" of the profits to be returned to the Australian people.

"I believe the government will prevail in the resource super profits tax debate because it comes down to two simple propositions - first, we should be taxing the profits and not the resources," he said.

"Second, the mining companies can and should pay a fairer share now in a huge boom time for profits for minerals, minerals owned by the Australian people.

"All we are asking is that the profitable mining companies pay a share of tax similar to a share they paid in the past."

Queensland Premier Anna Bligh, who presides over a resource-rich state, has positioned herself as a would-be umpire between the warring parties.

She said both sides should show some give-and-take.

"I think it is possible to make a scheme like this work, but the details have to be right and they'll only get right if everyone sits around the table," Ms Bligh said.

"I hope we start to see some negotiations very soon."

Ms Bligh said that should be done "sooner rather than later" and hinted at some dissatisfaction with the proposed tax in its current form.

"The Queensland economy is a diverse economy, but it has a strong reliance on mining and I want to see the mining industry go from strength to strength," she said.

"Queensland will fight hard to get the right taxation system.

"That is, a system that encourages investment and growth, but also a system to the Queensland taxpayers what they're owed."

Mr Rudd said existing royalties taxes targeted production, which was unfair to mining operations with higher investment requirements and costs.

"The current system of royalties means that companies are paying tax on every tonne of ore they extract, even before they have made a profit," he said.

"The super profits tax will remove all of this, so that mining companies won't pay tax until they are profitable and ... have a return on their investment."

But Mr Roche said profits would be a moot point if the tax went ahead, as companies would continue to pull their business out of Australia.

"The Prime Minister's got to have perspective - he says he wants a fair share for the people of Australia and that's a reasonable perspective, but a fair share can only be achieved if you keep the business here in Australia," he said.

"The only people cheering about the super tax at the moment are our competitors in Canada, Africa and South America."