The NSW Minerals Council has warned that taxes on mining, including the minerals resource rent tax, will be a burden on the mining industry and inevitably impact on super fund investments in the long term.
The council’s new chief executive, Stephen Galilee, told Investor Weekly that mining taxes had the potential to cause significant compliance costs for mining companies in NSW and across Australia, which would necessarily have an impact on profits.
Galilee said that would affect returns for super funds invested in blue-chip stocks.
“Almost all Australians have a financial interest in the success of the mining sector through shares held directly or in their retirement superannuation funds. This means that new taxes on mining will eventually have an impact on the retirement incomes of millions of Australian workers,” he said.
“The mining sector cannot be seen as an endless source of revenue for government. There are consequences from the imposition of additional charges and levies on mining, and the impact will be felt in the super funds of ordinary Australian investors.”
He went on to say the uncertainty generated by government taxes that affected the mining sector also had the potential to impact on profits and therefore returns to investors through super funds.
“Mining shares feature in most portfolios and they will continue to be good investments, however, the returns would of course be higher without new taxes like the carbon tax, which will be the highest in the world and cost the minerals industry $25 billion in its first seven years,” he said.
“While the minerals resources rent tax and carbon tax both start in July, there is yet more uncertainty and potentially more cost for the coal industry here in NSW as the state government grapples with the cost of the carbon tax and plans to increase coal royalties to recover these costs, as announced in its latest budget.”
“We welcome the state government’s undertaking that this change in royalties will mean no net loss for mining companies. However, there is likely to be compliance costs for the industry and uncertainty still remains on how the change will interact with the federal government’s mineral resources rent tax.”
The Gillard government has previously claimed the mining tax and the carbon tax will not impact on investors, due to compensation measures embedded in the legislation, such as the increase in the super guarantee from 9 per cent to 12 per cent.
The federal coalition remains opposed to the mining tax, however, recently backflipped to endorse the increase in the super guarantee, stating that it would fund the rise through additional savings measures.
