Australia's High Court to hear mining tax challenge

November 5, 2012

Australia’s High Court has agreed to hear a landmark challenge to the controversial super profits mining tax in early 2013.
Chief Justice Robert French ruled that the court’s full bench will hear the case - brought by West Australian mining magnate Andrew Forrest’s Fortescue Metals Group, The Age reported.

The mining tax is forecast to raise $9.1 billion over four years, including $2 billion this financial year. However, because of lower commodity prices it reportedly produced nothing in the September quarter, and Deloitte Access Economics forecasts it will yield no more than a net $500 million this financial year.

The flaky nature of the mining tax projection is one reason why the $1.1 billion projected surplus for 2012-13 in the recent budget update is being heavily questioned.

Prime Minister Julia Gillard and her ministers are refusing to guarantee the surplus will be met.

Fortescue paid no mining tax in the September quarter and believes the tax is unconstitutional as only state governments can impose royalties. The government has said it will strongly defend the tax, and was careful to ensure the tax was on mining profits and not on production. Fortescue argued that the tax discriminates between states and prevents them from encouraging mining activity.

The two biggest mining states, Western Australia and Queensland, have previously said they would put forward their own arguments in the case without formally joining Forrest’s challenge.

Treasurer Wayne Swan has previously described the challenge as futile, saying he was confident in the government's legal position.
A leading constitutional law expert, University of New South Wales professor George Williams, told The Age that the court had been expected to agree to hear the case because of its significance for federal-state relations.




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