The Treasury Secretary Ken Henry defended the new mining tax before a Senate committee in Canberra that is investigating the new taxes that the Gillard government has planned. This includes the Minerals Resource Rent Tax (MRRT) which has subsequently evolved into a more complex tax to accommodate specific mining industry requests and government needs.
Dr Ken Henry said that the proposed MRRT is a complex tax but not to the degree that mining companies could not understand their obligations. He denied that the tax system was not made simpler as per the tax review panel criteria.
The tax is likely to come into operation from July 2012 as a 30% tax. It will not compensate any mining company for future increases in levies that state governments charge them for mining in the states. The question of how the royalties will be credited under the tax is still in dispute between the mining companies and the government.
The MRRT was negotiated by Prime Minister Julia Gillard with the top three mining companies in Australia after Mr Kevin Rudd was ousted as Prime Minister. While the three big ones, BHP Billiton, Rio Tinto and Xstrata, who negotiated the deal are happy with the new form of the tax, several mining juniors are not. The tax has been a controversial issue all along the elections and deal making for the new government as well.