OECD chief says Australia’s new mining tax is justified

SYDNEY, May 22 (BestGrowthStock) – Australia’s planned new 40
percent tax on mining profits is justified and unlikely to
adversely affect investment in the long term, the head of the
Organisation for Economic Cooperation and Development has said.

OECD Secretary-General Angel Gurria told Australian radio
that the country’s mining “bonanza” should be shared and used
as a buffer against future potential economic problems.

“Whenever there is a bonanza, whenever there is a period in
which there is a price spike or a price hike then it is
legitimate for a sharing of that bonanza and that benefit,
especially if there are ways in which that can be used to
stabilise markets in the future,” he said.

The new tax is set to raise about A$12 billion ($11
billion) in its first two years and is due to be implemented
from July 2012. It was announced earlier this month as the
government unveiled the findings of a major review of
Australia’s taxation system.

Gurria said when taxes depend on the extractive activities,
one should be ready for the bad times. “Right now we’re going
through a period of relatively high prices,” he told the
Australian Broadcasting Corporation (ABC) radio programme
Sunday Profile, in an interview to be broadcast on Sunday.

The new Resource Super Profits Tax will hit big miners such
as BHP Billiton, (BHP.AX) (BLT.L), Rio Tinto (RIO.AX) (RIO.L)
and Xstrata (XTA.L), who are pressing hard for it to be revoked
or modified, saying it will deter investment.

The miners have threatened to cancel planned investment
unless the tax is abandoned or modified. It is shaping up as a
major issue in an election due later this year, with the
conservative opposition vowing to overturn the new tax if
elected.

Gurria said that mining companies considering the longer
term, rather than “the profit of next year or the balance sheet
of the next quarter” would still see Australia as a good place
to invest.

“I think what drives investors is not necessarily that
there are going to be a higher or lower tax at any point in
time,” Gurria said.

“In the particular case when you’re talking about the
availability of raw materials, when you’re talking about the
availability of materials in general, my impression is that
taxes are not the major reason why they would invest or they
would be interested.”

Investing Basics

(Editing by Jeremy Laurence)

OECD chief says Australia’s new mining tax is justified