Why do they bother with these expensive "consultation" charades when the design is a done deal and the money has already been handed out to Jokeshott and Windsor?
Yup this "fresh, new, open, accountable, transparent .. sun shining through" Gov smells a lot like the last one to me.
--- The Australian
Miners fail to get a break in tax plans, white paper reveals
Andrew Burrell, Sarah-Jane Tasker and Matt Chambers
THE high-powered committee given the task of designing the $10.5 billion mining tax has angered emerging miners. The committee is refusing to debate whether billions of dollars worth of infrastructure spending and financing costs should be deductible under the new regime.
The Policy Transition Group led by former BHP Billiton chairman Don Argus and Resources Minister Martin Ferguson yesterday released a detailed, 130-page guide on the planned technical design of the mineral resources rent tax.
But the discussion paper made it clear that miners should not be given a tax break for interest and other financing costs, and it did not even raise for discussion the question of whether a company's infrastructure investments should be included.
The paper was released just days before the panel heads for a showdown in Perth, where it will have one-on-one meetings with angry mining executives next week.
Fortescue Metals Group founder Andrew Forrest said he was concerned the panel had ignored industry concerns about the lack of tax deductibility for infrastructure such as ports and railways.
He said this would stifle much needed investment and favoured established miners at the expense of the emerging sector.
"The three big mining companies (BHP Billiton, Rio Tinto and Xstrata) deliberately designed this tax with no tax deductibility for infrastructure," Mr Forrest said.
"Without infrastructure access or investment there will be no new mines. These three big miners know this and they are trying to shut the door to new entrants."
The issues paper says it believes iron ore and coal should be taxed at the "first saleable point".
This was defined as being after primary crushing and screening, which means the value added in magnetite iron ore production through heavy processing would escape the tax.
But the panel also said the government's intention that the value of the commodity be determined at the "mine gate" had presented it with difficulties.
"Giving precise meaning to this concept is not straightforward, as no standard definitions of the terms 'first saleable form' and 'mine gate' exist and the taxing points they suggest may not always be the same," the paper says.
Mike Elliott, global mining and metals leader at Ernst & Young, said the taxing point was a critical issue.
"This is the first time there has been expressed guidance to at least how the policymakers might be thinking how that taxing point might work," he said.
"It puts a straw-man case out there and there will be those that have issues with that and they can use that case to argue whether that case makes sense or something else makes more sense."
Brockman Resources managing director Wayne Richards said yesterday that his emerging iron ore company would study the extensive issues paper, but he said the taxing point was likely to be widely debated by the industry.
Blake Dawson tax partner Teresa Dyson said the issues paper would provide miners with greater certainty on the likely design of the tax.
She said companies could input data into a template financial model set up on the panel's website.
"They will be able to run the numbers and this will be a useful guide for them in calculating the impact of the tax," she said.
Mr Elliott said the paper had provided more detail than originally expected.
"What they have put out there is at least some of their initial views, in a straw-man case, showing the way they interpret it and describing what their preferred position is," he said.
"Because it is their preferred position, it gives a basis for people to say whether they agree or disagree with that position."
Mr Elliott called on miners to become involved in the process and make their concerns heard.
"While there may well be political concerns, companies have to deal with the technical issues and we would be advising our clients there is an urgency of a call to action to consider the impacts on their businesses and work out where they stand on that and make that clear to the panel," Mr Elliott said.
"No matter what your political position is on this you can't delay engaging with this process because the opportunity to have your voice heard is now."
