Premier Colin Barnett hits out at new mining tax

Premier Colin Barnett has hit out at the Federal Government over the new mining tax, saying it could find itself in constitutional trouble. Mr. Barnett said he found it extraordinary the Federal Government would negotiate with only three big companies and report that as a deal with the mining industry, and had not included the mid-level mining companies, nor talked with the WA government.

"This version is not as damaging for the industry as the first version was, but there is so much that is unknown about this proposal. Constitutionally I don't believe the Commonwealth can tax the resource, they can tax profit, but there's a big question as to whether they can tax the resource."

He said constitutionally that right lay with the states, and that Western Australia will not give up its sovereignty over minerals. "I'm not happy about the whole concept of the Federal Government moving into mining taxation, never have been, never will be."

The Premier also said the deal which limits a reworked resource tax to just 320 companies mining iron ore, coal, oil and gas was discriminatory within the mining industry. "It's coal, iron ore and petroleum today. If the nickel price trebled, and nickel prices are highly volatile, will it be nickel tomorrow? This is not a sensible way of going about it."

"It's a lot better than what was proposed, I concede and acknowledge that, but we now have a discriminatory taxation, a new tax on mining, and one that I think is highly uncertain into the future."

The new tax will apply to iron ore and coal projects which will be taxed at a new headline rate of 30 per cent - down from the previously planned 40 per cent. The cut-in rate also has been adjusted to the long-term bond rate plus seven per cent. The current petroleum resource rent tax will be extended to all onshore and offshore oil, gas and coal seam methane projects. Other commodities will not be included in the tax regime.