Friday, June 11, 2010

Friday, June 11, 2010 by Jamie Ashcroft

BHP noted its disappointment that such a consultation has not been possible in relation to the ‘super-tax’. “Therefore the government missed the opportunity to have Treasury's theory tested by practical experience and industry knowledge”, Nasser stated.

“We always welcome the opportunity to consult but unfortunately ... there has been no acknowledgement by the government of the major flaws of the proposed tax and the significant impact on the industry”. BHP said it is not against tax reform, but it believes that the principles of sound tax reform are not present in the current proposal.

“The 40 per cent super tax rate, in addition to company tax, will make the Australian mineral resources industry the highest taxed in the world and uncompetitive with other resource-rich nations. An uncompetitive tax rate is a fundamental problem.”

“The super tax will apply to existing projects, fundamentally changing the rules when billions of dollars have already been invested.”

According to BHP, any new tax on the minerals resources industry should: Not fundamentally change the rules of the game on existing projects; Ensure that overall tax is competitive with other mineral resources countries; Vary between the kind of mineral resources mined; Be applied on the value of minerals alone.

Otherwise, the company believes that the proposal could damage Australia's reputation as a stable and fair place for investment, the country could lose investment to countries with more attractive tax rates, and it could unintentionally penalise investments in infrastructure, processing or other support activities.

“The Australian government needs to understand the real world impact of the proposed super tax or it will hurt the Australian minerals industry and hurt Australia's future,” Nasser said.

BHP also told its shareholders that it wanted to set the record straight, in terms of its own tax payments in Australia. “The government has not accurately represented the level of taxes we pay on our Australian operations ... It concerns BHP Billiton that inappropriate conclusions appear to have been drawn ... Total taxes paid by BHP Billiton's Australian operations in relation to the financial years 2004 to 2009 inclusive exceed A$24 billion."

“The 2009 earnings of BHP Billiton's Australian operations were almost fully reinvested back in Australia,” he added

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