Australia kills unpopular mining tax

Australia kills mining tax

Australia's government has finally revoked an unpopular tax on mining companies’ profits, fulfilling a pledge made during last year's national election and handing Prime Minister Tony Abbott, who took office last year, a political victory.

The decision to scrap a 30% tax on profits on coal and iron ore mining, which was seen as one of the primary reasons behind the downfall of the previous government, passed by a narrow margin on Tuesday, The Australian noted.

It was possible after conservative leaders struck an unexpected deal with mining tycoon-turned-politician Clive Palmer's United Party, which holds the balance of power in the upper house of Parliament.

Palmer’s party agreed to the move in return for certain concessions, which include freezing the government's contributions to state pensions and keeping a bonus program for school children.

"The mining tax was possibly the most stupid tax ever devised," Abbott said in Parliament, having convinced opponents to drop resistance that saw an earlier repeal effort fail a few months ago.

The bill is now heading to the House of Representatives where it is expected to pass as well.

Hearts divided

But not everyone is happy. Jennifer Westicott, CEO of the Business Council of Australia, told The Sydney Morning Herald she was “disappointed” with the maintenance of certain provisions in the Mineral Resources Rent Tax (MRRT) repeal.

She claimed the MRRT still acts as a “burden on Australia’s already unsustainable medium-term fiscal provision.”

This is not the first time Australia repeals a controversial tax. In July, it became the first developed nation to repeal its carbon tax legislation.

The laws had sought to put a price on greenhouse-gas emissions, but generated years of political debate.

Australia's economy is heavily dependent on mining, which has contributed to it being one of the world's largest per capita greenhouse gas emitters.

However, the carbon tax has been blamed for higher energy bills and living costs.