Queensland joins Australia mining tax challenge

SYDNEY – The Queensland government Monday joined a High Court challenge by Fortescue Metals against Australia’s controversial tax on the mining boom, claiming it discriminates against the resource-rich state.

Fortescue, a major Western Australia-based iron ore firm, launched a legal challenge last month against the Minerals Resource Rent Tax (MRRT) on constitutional grounds.

In joining Fortescue, Queensland Attorney-General Jarrod Bleijie argued that the tax discriminated between Australia’s states and restricted Queensland’s ability to encourage mining, contrary to the constitution.

“Taxes must be imposed equally and it can be argued the MRRT is calculated in such a way that it discriminates between states,” he told The Australian newspaper.

“This is a battle that has to happen because there is the potential the MRRT is constitutionally invalid.”

Queensland is governed by the Liberal National Party, the conservative opposition to the ruling Labor government on a national level.

The mining levy, which came into effect on July 1, taxes profits from coal and iron-ore sales at 30 percent once miners make Aus$75 million per year in profit.

Critics have charged that the tax will drive investment overseas and make Australia more reliant than ever on growth in its biggest trading partner China.

Canberra plans to use revenue from the tax to fund pensions and infrastructure and Treasurer Wayne Swan called the Queensland challenge “futile”.

“We are very confident in our legal advice,” he said.

Labor originally wanted a 40 percent tax on all profits generated by resources firms as the nation enjoys unprecedented demand for its huge mineral deposits, mostly from rapidly industrialising Asia.

But this was scrapped in favor of a 30 percent tax only on super-profits from iron ore and coal after an intense lobbying campaign from the powerful and wealthy industry, led by BHP Billiton, Rio Tinto and Xstrata.