May 4 2010
Rio Tinto today warned the new resources tax announced by the Federal Government could erode Australia's competitiveness, severely curtail investment and limit jobs growth.
Rio Tinto managing director Australia David Peever said the final design and implementation of the additional resources tax was crucial to ensuring unintended consequences didn't filter through to other sectors of the national economy.
"We are concerned about the inclusion of existing operations and the apparently arbitrary way the new resources tax was set at 40 per cent. Taxing 40 per cent of profits over the long-term bond rate, together with corporation tax, would make the Australian minerals sector the highest taxed in the world, seriously eroding competitiveness," Mr Peever said.
"And just as importantly, altering the rules for existing multi-billion dollar projects in mid stream - after large amounts of capital have already been put at risk over many years - would be the worst possible message Australia could send to investors."
Mr Peever rejected suggestions that the Australian community was not extracting a fair return from the growth in the mining sector, noting the industry already pays more tax than other parts of the economy.
"All Australians benefit from a strong mining sector. In the same way all Australians are affected by measures that hurt the mining sector. Australia was saved from the worst of the GFC by the strength of the resources sector, but the same industry is now being portrayed by the Government as not paying its way.
"Periods of high commodity prices also give the industry the capacity to invest through the cycle and to return value to ordinary shareholders. Across commodity price cycles, Rio Tinto has maintained its strong record of investment in Australia for more than a generation, expanding its business and creating wealth for shareholders and the broader Australian community."
Rio Tinto, like other mining companies, continues to deliver a wide range of local and regional community benefits that are not recognised in the basic taxation statistics. Investments in local infrastructure and agreements made with indigenous communities, for example, are provided on top of mining royalties and company taxes.
Rio Tinto will continue to keep its shareholders and customers informed about issues of concern regarding particular aspects of the Government's tax proposals, Mr Peever said.
"Rio Tinto is not opposed to tax reform. We support genuine tax reform that protects against sovereign risk, improves the competitiveness of the resources sector as an investment destination and promotes economic growth," he said.
"We will comprehensively analyse the potential impact on our business of all of the Government's proposals and want to play a proactive, constructive role in the consultation process outlined by the Government."