TAX NEWS - JUNE 2010

Australia Tax: PM Kevin Rudd takes control of mining talks

by Dennis Shanahan, 02 June 2010 -- Kevin Rudd is preparing to deal directly with senior mining bosses over the proposed resource super-profits tax to head off a damaging public brawl between the industry and the government and reach a genuine compromise on tax reform.

The Prime Minister yesterday appealed for "direct" negotiations between the resource industry and the government instead of the megaphone trading of insults that had been conducted "through the media" in the past month, The Australian reports.

Mr Rudd declared he refused to be bullied by the miners, who had to pay "their fair share of tax" and warned the talks could last until the election.

After Mr Rudd's public appeal, the Minerals Council of Australia last night released an economic study suggesting the proposed tax would kill off new projects in nickel, gold and copper mining and cut 57 per cent off the value of new black-coal mines and 46 per cent of iron ore projects.

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.