Australian tax spooks miners, may win voters

10:24, May 04, 2010      

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Australian mining stocks dived Monday after the government announced a 40 percent tax on huge profits gleaned from the resource boom and which analysts think would boost Prime Minister Kevin Rudd's appeal.

Rudd will impose a new 40 percent tax on resource projects from July 2012, cut company tax from 30 to 28 percent by July 2014, and pour more money into worker pension funds, known as superannua-tion, under his plan announced Sunday.

Major resource stocks fell sharply on the news, dragging the benchmark S&P/ASX200 index down 21.9 points, or 0.46 percent, to 4,785.5.

Arguing that they already pay significant taxes, mining companies said the tax put planned projects worth more than 100 billion Australian dollars ($92.6 billion) at risk by pushing them elsewhere, as well as threatening Australia's competitiveness and severely curtailing investment and lim-iting job growth.

However, with a healthy lead in opinion polls, and an election due by late 2010, analysts said Rudd's plan was likely to be well received by voters, particularly with potentially more good news to be announced in the May 11 national budget.

"After all, what could be more popular than a tax that makes the mining industry pay more tax on its massive profits, to pay more money into your superannuation pension fund?" said Nick Economou, political analyst at Melbourne's Monash University.

Source: Global Times


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