TAX NEWS - June 2010

Australian mining tax developments

Australian Prime Minister Kevin Rudd, at risk of losing an election expected in October, is under attack from miners and voters over a new resource tax the government plans to use as its re-election platform.

Over $20 billion in new investment in Australia has been put on hold by miners, who have launched a blistering advertising campaign against the 40 percent "super profits" tax due in 2012, warning it will hit a sector credited with helping Australia avoid recession during the global financial crisis.

Following are some highlights in the debate over the proposed tax at 0700 GMT on Thursday:

* Andrew Forrest, CEO of Fortescue Metals Group (FMG.AX: Quote), after meeting Prime Minister Kevin Rudd in Perth.

"I'm grateful to the prime minister for giving me a full and proper hearing, so that he understands clearly, from the horse's mouth, that there is no bluff, no fear campaign."

"The prime minster now knows a great deal more about Fortescue, knows that when we said there were 30,000 jobs on the line, he understands why that is and why that number is a conservative number," added Forrest, who has threatened to scrap up to $15 billion in future projects if the tax goes ahead.

* Small Business Minister Craig Emerson, referring to recent announcements by mining companies on project threats: "What is becoming clear is that the mining companies are willing to say or do anything to spread misinformation and create confusion".

* Western Australia state Attorney-General Christian Porter said he is looking at a challenge to the tax in Australia's highest court, Australian Associated Press reported.

Porter said there were established precedents to constitutionally challenge the tax if central government legislation destroyed or limited a state's ability to function as a vital component of the federal system of government.

He said if the tax ended the state's ability to levy royalties it would be a strong basis for a challenge.

* Prime Minister Rudd said there was no legal threat to the tax, telling ABC radio "....the Commonwealth is advised that we're well fortified in our constitutional position on that." * Australian Treasurer Wayne Swan on talks with miners: "Look there's a range of opinions out there. You'll find some people are very vocal in their opposition. Others will concede that there is a case to pay more," Swan told ABC radio.

"But we are listening to what the mining community and the broader community has to say as we move around the country."