Mining and Heavy Industries

Latest figures show 51% effective tax rate for miners

Money. Photo: Jim Wilson

A Deloitte study commissioned by the Minerals Council of Australia has suggested Australian miners paid more in taxes and royalties in FY16 than they earned in after tax profits.

The 2017 edition of the Minerals Industry Tax Survey, published this week, considered tax and financial figures from 25 Australian mining companies, covering more than 70% of production of Australia’s major commodities.

When royalties and taxes were combined – a step disputed by many in the anti-mining camp – the Deloitte survey found mining companies paid an effective 51% tax rate in FY16.

This was the second-highest ‘effective tax rate’ cited by Deloitte in the eight year history of the Minerals Council’s tax survey, behind only the 54% rate calculated in FY15, and was up 6% on the average rate since FY08.

“This survey,” Mining Council interim chief executive David Byers said, “conclusively busts the myth that Australian mining companies pay little or no tax.”

Byers continued: “By paying its fair share of company tax and royalties, the Australian minerals industry helps to fund the schools, hospitals, police and other essential services on which Australians depend.”

Deloitte’s report noted mining royalties had increased as a share of governments’ total tax take from mining companies, representing 59% of the total tax take in FY16.

“In FY16 miners were paying approximately 1.4 times more in royalties than company taxes,” the report outlines.

“Given company tax is directly linked to profits whereas royalties are not, this ratio is likely to remain in this range into the future unless underlying profitability improves significantly.”

In fact, if the Minerals Council gets what it wants, the ratio is likely to grow further out: Byers used the report to support the Council’s long-held argument for a reduction to Australia’s corporate tax rate.

“Australia’s 30% company tax rate is too high for a capital-hungry nation which needs to encourage business investment,” Byers said.

Leave a Reply

Send this to a friend