Trading Room home page

Govt doesn't get mining tax: Cormann

Market watch top headlines

Australian reports

World reports

Stocks to watch

ALL, BHP, FMG, RIO, DOW, FLT, NBL,

CANBERRA, Feb 15 AAP

February 15 2013, 09:14AM

Shadow assistant treasurer Mathias Cormann says the prime minister and treasurer agreed to the mining tax without understanding its finer detail.

Treasury officials told a Senate estimates hearing on Thursday the federal government won't know exactly how how much revenue it has made from its Minerals Resource Rent Tax (MRRT) until 2014.

The tax has raised around $126 million in revenue in its first two quarters, and isn't expected to generate the $2 billion a year predicted by the government.

Officials from Treasury and the Australian Tax Office told the hearing the payments already reported may still change.

A number of companies had scaled down their estimated MRRT payments, but not a lot of detail about those changes is currently known, the hearing was told.

Senator Cormann said the $126 million figure would likely slide even further once company tax and other credits were taken into consideration.

He said Prime Minister Julia Gillard and Treasurer Wayne Swan clearly didn't understand the technicalities of the MRRT, such as issues around state royalties, when they signed up to the tax.

"Wayne Swan is still not volunteering the truth about mining tax revenue collections that can actually be properly compared to the mining tax revenue estimates that he put forward in budget," Senator Cormann told ABC radio on Friday.

"They signed a deal making commitments without having any understanding whatsoever what the cost of those commitments would be."

Defence Minister Stephen Smith said the tax arrangements made by mining companies, which allowed them to minimise payment of the MRRT, were now a matter between the companies and the Australian Taxation Office.

Mr Smith said the treasury made clear this week the companies were entitled to make some valuations and baseline judgments on their starting point for payment of the tax.

"In the end that will be a matter for Australian Tax Office, not treasury, to make judgment about an individual company's taxation arrangement and their liability," he told ABC TV.

Mr Smith said Treasury Secretary Martyn Parkinson stated that at the government's negotiations with the miners, the companies outlined what they regarded as their baseline valuation measures.

Those companies subsequently set the baseline for when the tax actually started.

"That is an individual personal tax matter between the Australian tax office and those companies," he said.

"For Treasury to have access to that at the time the treasury secretary was speaking about it would be the same as treasury having access to your personal tax details or mine, which is not appropriate, indeed unlawful."

Opposition Leader Tony Abbott said Labor ministers were "in denial" about the failure of the mining tax to serve its purpose.

Miners pay royalties and company tax already, making the MRRT a third cost for resource companies, he added.

The impact of the MRRT was a "lose-lose" for everyone involved.

"(It is) a tax which impacts on investment, impacts on employment but in the end raises hardly any revenue at all," he said in Sydney on Friday.