Australia's highest court has ruled against mining magnate Andrew "Twiggy" Forrest's appeal over the country's Minerals Resource Rent Tax (MRRT).
Forrest – founder of Fortescue Metals (ASX: FMG) - argued that the tax was in conflict with state and national mining laws and constituted "an incorrect use of the government's legislative powers," the Associated Press reports.
“Fortescue challenged the MRRT because it was an unreasonable intrusion into an area of state responsibility and that it was also an unfair, discriminatory and complex tax," Nev Power, the company's CEO said in a statement. "We’re disappointed by today’s decision.”
But Australia's court would have none of it and unanimously dismissed the challenge.
MRRT, also known as the "super-profits tax," is designed to kick-in when a coal or iron ore miner records annual profits above A$75 million, at which point the tax rate becomes 22.5%.
The tax has also been questioned over its ability to generate revenue. Initially, the government said it would bring A$3 billion in its first year but it actually raised only $200 million.
"As a profits-based tax, it responds to changing industry conditions, automatically collecting less revenue when profits are low and more revenue when profits are high," Chris Bowen, treasurer, told the AP in defense of the legislation.
But with federal elections approaching, there may yet be some hope for the iron ore and coal diggers of Australia. Power thanked the opposition leader on Wednesday for his promise to repeal the MRRT if given the chance.
In other company news, Forrest announced on Tuesday that he had surpassed his $1 billion goal of awarding contracts to Indigenous companies, the Guardian reports. The goal is part of Fortescue Metals' 2011 commitment to boost businesses owned by Aboriginal Australians.
Creative Commons image by: Mines and Money