Dryblower wonders whether anyone will ever actually pay a cent in MRRT

WILL anyone ever pay Australia’s new Minerals Resource Rent Tax? That’s a question which might sound a bit odd, as the tax is planned to start on July 1.
Dryblower wonders whether anyone will ever actually pay a cent in MRRT Dryblower wonders whether anyone will ever actually pay a cent in MRRT Dryblower wonders whether anyone will ever actually pay a cent in MRRT Dryblower wonders whether anyone will ever actually pay a cent in MRRT Dryblower wonders whether anyone will ever actually pay a cent in MRRT

 

Tim Treadgold

But, before we get to tax kick-off time there are issues still brewing which indicate that the MRRT might die a legal or political death before the first assessment notices are issued by the Australian Tax Office.

Last week saw the latest attack on the tax, albeit in a back-handed sort of way, when a member of Australia’s ruling Labor Party said that if the tax was rescinded by a new conservative government nothing should be done to stop the change.

Comments from the new Labor leader in Western Australia, Mark McGowan, revealed his concern about the tax, adding to other pressures building in the background, including:

A promised High Court legal challenge led by Australia’s second richest person, iron ore entrepreneur, Andrew Forrest.

An offer from the government of WA to add its name to the High Court challenge – an important move as states get priority treatment in the country’s highest court.

Unanswered claims by leading accounting firms that none of Australia’s big miners, including BHP Billiton, Rio Tinto and Xstrata, will pay any MRRT for up to five years because of depreciation and other deductions available to them.

The loss of voting support over the weekend by maverick independent member of federal Parliament Andrew Wilkie over a gambling law dispute which cuts the government’s majority to one vote.

None of those issues on their own sound the death knell for the MRRT but taken together and a pattern is forming which indicates that the tax is far from having a smooth start just five months from now.

McGowan’s comments, made during interviews to mark his elevation to the position of Opposition Leader in WA, Australia’s premier mining state, were the latest clue that uncertainty about the tax continues to brew.

What happened is that McGowan “dared” any new conservative government to abolish the tax and then explain where the alleged $11 billion in missing MRRT tax revenue would come from.

The new boy obviously meant his comments as a challenge to opponents of the tax, but inside McGowan’s hunt for a headline was a clear message – he knows that in his own state the MRRT is part of a package of anti-mining laws which will condemn him to years of obscurity.

Even if McGowan tries to play down his comments on the tax as a dare it is interesting that a man close to the top of his own political party suggest that the tax be tossed away in an act of political brinkmanship.

Whatever was buzzing around inside McGowan’s head it is just one example of the tax being an issue which will not go away.

Of greater importance is the potential for a High Court challenge to the law, which appears to have a greater chance of success than most people realise given the apparent unfair nature of the tax, a point Forrest has made repeatedly with his claim that the big miners had too much say in the MRRT’s design.

If Forrest and the WA government ever get their day before the court they should be able to mount a persuasive case along the lines of all taxpayers having the right to equal treatment and for big taxpayers to not get special treatment.

Some of the potential witnesses in such a case might have a difficult time in front of a court if they can ever be forced to talk about the backroom deals that were negotiated.

But before anything even gets to court there are the latest changes to the political landscape in Australia, with Wilkie ending his support for the government of Prime Minister Julia Gillard and Gillard’s popular support taking another thrashing in the latest polls.

If Gary Morgan’s weekend poll is correct Gillard’s support among her own ALP voters has dropped to just 19%, down another 5%, and arch-rival Kevin Rudd is up 2% to 33%.

It is this cocktail of legal and political factors that lead Dryblower to wonder whether the MRRT will ever raise a dollar, let alone the $11 billion claimed.

This story first appeared on ILNS's sister publication MiningNews.net.

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