The minerals industry in 2013-14 faced a tax ratio of 47 per cent (including company tax and royalties), according to the annual Minerals Industry Tax Survey released today by the Minerals Council of Australia (MCA).
This figure is an equal record high for the survey and does not include others taxes, such as the Minerals Resource Rent Tax and the carbon tax which were also levied in 2013-14.
“As Deloitte Access Economics notes in its survey report, ‘the minerals sector paid nearly half of every dollar of profit as royalties and company tax to State and Federal Governments in Australia’,” chief executive Brendan Pearson.
“With the tax reform debate in full swing, this survey demonstrates that mining is among the highest taxed industries in Australia.
“With other countries taking steps to improve their tax competitiveness, Australia needs further tax reform to ensure it remains a competitive destination for mining investment.”
As part of the survey, the MCA also commissioned Deloitte Access Economics to provide updated industry-wide estimates for company tax and royalties in 2014-15 (a year beyond the data available from the survey).
“As expected, revenues to government in 2014-15 are estimated to have fallen as commodity prices and profits have declined sharply. Nonetheless, at $12.6 billion in company tax and royalties, they are significantly higher than in the years preceding the mining boom,” Mr Pearson said.
“Taxes paid have moved in tandem with total revenues peaking in 2011-12 ($24.5 billion) with commodity prices. This underlines the fact that company tax works effectively as a ‘profits tax’.
“Over the decade from 2005-06 to 2014-15, the minerals industry paid an estimated $165 billion in Federal company tax and State royalties alone.
“That’s roughly equivalent to Federal spending on higher education and schools and more than was spent on public hospitals and childcare over the same period.”
Queensland Resources Council Chief Executive Michael Roche said the report’s 2014-15 data had some startling findings.
“The impact of falling commodity prices on taxable incomes has seen a significant decline in company tax paid by the minerals sector, according to Deloitte Access Economics,” Mr Roche said.
“However, royalties are largely payable irrespective of profitability and have provided a more secure source of income for the States during this down cycle.
“Deloitte’s data shows that in 2014-15 the royalty take was $8.4 billion out of a total tax take of $12.6 billion and was 164 percent higher than in 2005-06 compared to 2014-15 but the company tax take was actually lower.
“It is important that the community recognises that many minerals operations continue to pay substantial amounts in royalties to state governments.”