The mining tax has raised only $232 million this financial year, a huge deficit on the expected revenues of $4 billion originally forecast when the tax was introduced in 2011.
The low taking come as Australia’s three major miners BHP, Rio Tinto and Fortescue Metals Group made a total half-year profit of more than $US14.58bn from their West Australian iron ore operations.
However The Australian reports BHP was the only iron ore miner to pay the tax in the six months to December.
As Australian Mining reported, in the half year ended 31 December 2012 BHP paid US$78 million for the MRRT, however it actually came out ahead by US$462 million in the half year ended 31 December 2013 thanks to a series of offsets
“The Group expensed US$29 million of MRRT in the period (31 December 2012: benefit of US$ 62 million; 30 June 2013: expense of US$ 114 million). This was offset by the remeasurement of deferred tax assets associated with the MRRT, which reduced taxation expense by US$ 491 million (31 December 2012: increase of US$ 140 million; 30 June 2013: increase of US$ 207 million),” BHP explained.
It is understood that this is in part due to concessions which allow miners to deduct the market value of existing assets over many years instead of subtracting the book value over five years.
This means large investments the miner made in operations at a time when commodity prices were at their peak can be used to offset their liabilities.
Added to this is also around $1.7 billion in tax credits that both Rio Tinto and BHP accrued this time last year, which allowed them to offset the mining tax, although they do not affect the levels of company tax they pay.
It is understood the tax has raised around $400 million since its introduction.
The Abbott Government has long-called for the abolishment of the tax and is expected to do so when the new Senate comes into term after July 1.
The Greens have previously called for the “flaws” in the tax to be fixed and want to see a higher tax rate, the inclusion of gold and cutting Commonwealth refunds of state royalty increases.
However the Minerals Council of Australia has defended the design of the tax and said the mining industry already pays its fair share.
“The industry paid a high and stable industry tax ratio averaging 41.3 per cent between 1999-2000 (and) 2011-12 — prior to the introduction of the MRRT,” MCA chief Brendan Pearson said.
“Total revenue from state royalties and mining company tax has been in excess of $130bn since 1999-2000.”
It is expected the Coalition will win the support of crossbench votes to scrap the tax with The Palmer United Party, Democratic Labour Party, Liberal Democratic Party and Family First all in support of repealing the MRRT.