Australia Repeals Unpopular Mining Tax

September 5, 2014

 

In a political victory for Australian mining companies, the government has repealed a tax on mining company profits that was introduced by the former Labor administration. The move brings a much needed boost for Prime Minister Tony Abbott at the end of his first year in office.

 

"It was a tax that destroyed jobs and damaged investment," Abbott said after the upper house voted 36 to 33 to repeal the tax.

 

The tax, dubbed the "super profit" tax, was introduced by Labor leader Kevin Rudd in 2010, levied a 22.5% tax rate on the profits of large coal and iron-ore producers. The tax was believed to have been created to help cover the planned increases in pension payouts and support government welfare plans.

 

Once the tax went into effect, mining companies including BHP Billiton and Rio Tinto immediately went on the attack and spent millions on ad campaigns demanding the tax be repealed.

 

The repeal of the tax is a sign from Australia to overseas investors that the country is once again open for business. This follows a similar action taken in July when a carbon tax was scrapped.

 

"The mining tax was possible the most stupid tax ever devised," Abbott said in Parliament. Over the three years the tax was in effect it managed to raise only $11 billion, failing to meet the governments own revenue forecasts.

 

Rio Tinto Chief Executive Sam Walsh said in a statement, "This will be a positive step for investment and good for jobs in the mining sector".