Wal King, the President of the Australian Constructors Association (ACA) has expressed the Association’s concerns with the Resources Super Profits Tax (RSPT) and set out nine principles that should guide the introduction of any new tax on the operations of the minerals sector.
"The engineering construction and process engineering industries are very important to the minerals sector and, the minerals sector is a significant user of contract mining companies’ expertise especially in the coal, gold, coal seam gas and iron ore industry," King said.
"There is no shortage of minerals in the world, what has always favoured Australia over other potential locations has been a commercial and regulatory environment that has equitably balanced risk and reward."
The Board of the ACA, representing the chief executives of Australia’s major contractors, has proposed nine principles that should guide the development of the new tax. These principles are:
- The changed arrangements should be designed and implemented so they do give rise to increased investment, employment and output in the sector over the medium to long term.
- The RSPT should not apply retrospectively to profits earned prior to the announcement.
- If, as proposed, the RSPT is to apply to existing projects, there should be fair arrangements governing their transition into the new arrangements.
- The definition of a normal "profit" should be such that a mining project with an expectation of earning this or a higher return would proceed.
- Governments at Federal, State and Territory levels should strive to achieve the complete and permanent removal of royalties or related changes on non-renewable resources.
- There should be appropriate arrangements to fully make up the loss of revenue for state and territory governments.
- Pending this, all existing royalties should be fully and promptly refunded to liable companies and no unscheduled increases or new royalties should be introduced.
- In view of the greater expected volatility of revenue inflows under the changed arrangements and to counter the risk of additional taxation in years of low prices, an appropriate proportion of the revenue collected when prices for non-renewable resources (and the associated RSPT collections) are high should be allocated to a reserve that will at least fully fund the commitments to refund royalties (or the make-up of revenue losses by state and territory governments) in periods of low prices.
- The non-renewable resource industry and industries linked to it as suppliers and customers should be fully and genuinely consulted in the design and implementation of the changed taxation arrangements.