Prime Minister Julia Gillard has slashed the mining tax rate and reduced the resources affected in order to secure an agreement with mining companies - lopping $1.5 billion from expected revenues in the process.
In details just annouced, the renamed Minerals Resource Rent Tax (MRRT) will apply only to iron ore and coal in Australia, and will be capped at 30 per cent rather than the original 40 per cent proposed, according to a press release. Oil and gas projects will come under the current Petroleum Resource Rent Tax (PRRT) regime to all Australian onshore and offshore oil and gas projects, including the North West Shelf.
Other commodities will not be included, which reduces the number of affected companies from 2,500 to around 320, the statement said. These commodities were not expected to pay significant amounts of resource rent tax, and excluding them will allow many companies to remain in their existing taxation regimes.
Crucially, the new ''super profits'' tax will only kick in when profit exceeds the long-term bond rate plus 7 per cent - compared with just the bond rate in the original reform announced by then-Prime Minister Kevin Rudd on May 2.
The ''improved'' reforms are estimated to reduce revenue by $1.5 billion over the forward estimates, the statement from the PM's office said.
As a result, the plan to cut the company tax rate from 30 per cent to 28 per cent has been pared back, with only half that cut to be introduced.
''The company tax rate will continue to be cut to 29 per cent from 2013-14 but will not be further reduced under current fiscal conditions,'' the statement said. ''Small companies will benefit from an early cut to the company tax rate to 29 per cent from 2012-13.''
