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Australia mine lobby: Tax stokes sovereign risk

MELBOURNE -- A proposed new mining tax is creating concerns about sovereign risk in Australia and will weaken the nation's economy, the mining industry lobby said Wednesday.

As Prime Minister Kevin Rudd prepares to start selling the tax in the resource rich state of Western Australia, Minerals Council of Australia Chief Executive Mitch Hooke said the proposal is worrying the business community.

"(There is) emerging uneasiness, at least within business circles, of increasing sovereign risk of doing business in Australia," he told a conference in Melbourne.

Hooke said the government is focusing on redistributing wealth rather than boosting productivity and the impost of the new tax would damage the industry and see projects cancelled or delayed.

"The government's proposed tax will weaken the Australian minerals industry, and if you weaken mining you weaken the Australian economy," he said.

Hook said the government has been misrepresenting the amount of tax paid by the mining industry, which paid A$80 billion in tax and royalties over the past decade, not the A$9 billion the government has claimed.

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