Despite the former government’s initial forecasted receipts of $10.5 billion from the MRRT over the first two years from 1 July 2012, the net MRRT receipts for 2012-13 were just $200 million. The Budget papers attribute this shortfall to factors including commodity prices and design elements of the MRRT. Net receipts for 2013-14 are expected to be around $100 million, partly due to some companies claiming refunds from overpaid MRRT instalments from the previous year.
No MRRT receipts are budgeted from 2014-15 onwards on the basis of the government’s announcement that the MRRT will be repealed from 1 July 2014.
The mining industry continues to pay significant taxes with company tax and state royalty payments totalling about $20 billion per year according to the Minerals Council of Australia (MCA). Coal miners, experiencing much lower commodity prices, continue to pay state royalties at up to 12.5 percent of sales (based on current prices) regardless of whether a mine is profitable.
With increased supply coming on line and lower commodity prices, the Australian mining industry is facing pressures resulting in a number of mine closures and project delays. This could impact State government revenues including royalties, pay-roll taxes and stamp duty collections which are not profit based taxes but depend on continued investment and activity in the mining industry.
Both inbound investors and the mining industry will be looking for legislative certainty. In light of the new Senate composition on 1 July 2014, with 33 Senate votes, the Coalition will need to secure an additional 6 votes to repeal the MRRT.