Calls for fundamental reform of Australian mining tax

One of Australia's leading intellectuals and a former key adviser to the country's incumbent Labor Party has called for far-reaching reforms to the resource giant's mining tax and GST.

Ross Garnaut, a Distinguished Professor of Economics at the Australian National University and long-time intellectual stalwart of the Australian Labor Party, has called for fundamental reform of the country's tax system which will heavily affect taxation of the federation's mining-rich states.

Australia's Financial Review reports that Garnaut made these statements as part of a review of the country's GST, in which he was critical of the current system under which the GST is distributed from rich to needy states:

Professor Garnaut argues that because resource-rich states lose most of their mining revenues under this system, they have no incentive to switch to a more efficient tax base. If the resource-rich states took a long-term view, they would be more inclined to switch to something like a minerals resource rent tax than royalties.

Reform of Australia's mining tax is an especially vexing issue for political leaders, given that Australia's last Prime Minister Kevin Rudd was ousted over efforts to increase the tax burden of the country's key resource companies.