The mineral resource rent tax has been repealed: is it now time for a better-designed resource rent tax on all extracted minerals and gas?
McLaren, J and Passant, J, The mineral resource rent tax has been repealed: is it now time for a better-designed resource rent tax on all extracted minerals and gas?, Journal of the Australasian Tax Teachers Association, 10, (1) pp. 87-102. ISSN 1832-911X (2015) [Refereed Article]
The Mineral Resource Rent Tax (MRRT) was repealed by the Mineral Resource Rent Tax
Repeal and Other Measures Act 2014 (Cth) in September 2014. The Abbott Coalition
Government had promised to abolish the mining tax in the lead-up to the election in 2013,
and it was able to achieve this in 2014. The MRRT had its faults, and was created with the
help of the mining industry and the biggest mining companies in Australia. There is an
overriding philosophical basis for the imposition of a super profits tax on mining
resources. It is simply that these resources are finite, and future generations of
Australians have a vested interest in knowing where their share of the wealth from taxing
the mining companies has been invested by the government or spent by the government.
What infrastructure has been developed as a result of collecting a super profits tax from
the mining companies or sovereign wealth fund? What is left for future generations when
the minerals have run out and the mining companies have moved on to exploit the mining
resources of other countries? On the other hand, the Petroleum Resource Rent Tax (PRRT)
is still in existence and it has been collecting revenue for the Commonwealth government
since 1987. This article examines what was wrong with the recent MRRT. First it briefly
considers the political issues raised by both sides of politics in Australia. It then discusses
the rationale for taxing the super profits of mining companies when the price of minerals
is high. This includes an examination of the taxation of economic rent and the
recommendations of the Henry Tax Review. The final part of the article proposes a new
and better mining tax that would overcome many of the criticisms the old MRRT faced
from politicians, economists and mining companies.