Australia’s mining industry’s return to the community has hit record levels with a combined $43.2 billion in company tax and royalties paid in financial year 2020-21 – a 16 per cent increase from the $37.3 billion contributed in the previous period.
The call for extra taxes on mining profits, proposed recently by Rod Sims, disregards the fact that mining investment is highly uncertain and subject to periods of high and low revenues over a mine’s life.
Company taxes paid reached a new record high of $26.5 billion and royalties also reached a high of $16.7 billion in 2020-21, contributing significantly to federal, state and territory governments at a time when they needed it most during the COVID-19 pandemic.
The effective tax rate on Australian mining investment is already high relative to many mining jurisdictions in other countries.
Australia needs to attract more investment in exploration, mining, minerals processing and mining-related manufacturing for the economy to benefit from growing global demand for minerals and metals, with strong competition for this investment from other mining countries.
Rather than proposing piecemeal changes to taxes based on short-term conditions that will lead to perverse outcomes, Australia needs comprehensive reform of the tax and transfer system to enable the economy to deliver the growth, incomes and jobs that underpin the nation’s prosperity.
The mining industry delivers benefits for all Australians via the tax and royalty revenue it pays to governments each year. It has been paying tax consistently for years and record amounts over the last decade.
The record company and royalties payments are highlighted in an Ernst & Young report commissioned by the MCA which also shows that in the last decade (between 2011-12 and 2020-21), the mining industry contributed $254 billion in company taxes and royalties ($142 billion and $112 billion respectively).
Company tax and royalties payments are expected to continue increasing in 2021-22 in line with increases in export earnings. This is driven by a positive outlook in the price and quantity produced of metallurgical and thermal coal coupled with a robust year for iron ore, gold and base metals.
The industry in Australia continues to pay the highest average wages, the most company taxes, delivers the most export revenue and is critical to supporting regions and communities – supporting 1.1 million jobs in the mining industry and its supply chains.
Mining companies also support thousands of regional businesses around Australia and their workers who provide essential services that keep the industry operating. In addition to new jobs across the nation and paying its fair share of taxes and royalties, the mining industry has been supporting local communities through the COVID-19 pandemic, providing substantial donations to hospitals, charities, child care centres.
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