Queensland Resources Council chief executive Michael Roche said that axing the fuel tax credit for off-road use of diesel by exploration and mining companies (and by extension quarries) would have immediate and damaging consequences for north west Queensland.
Documents obtained through Freedom of Information requests indicate the Federal Government’s Business Tax Working Group examined removing the exploration and prospecting deductions and accelerated depreciation of assets.
Roche said there is growing speculation that the federal government will axe the fuel tax credit for mining companies as a way of raising an estimated $2 billion to fund the Government?s big ticket spending commitments.
The Federal Government gives just over $5 billion in direct subsidies to mining companies each year, mainly in the form of cheap fuel used in heavy vehicles and tax breaks for building roads and railways, according to a report by the Australia Institute think tank. The report was commissioned by activist group GetUp and is designed to put pressure on the government to cut subsidies as part of its savings drive ahead of the Federal Budget this month.
?The biggest cheer squad for this move are the Greens, who are trying to claim that the fuel tax credit ends up in the pockets of so-called mining magnates,? Roche said. ?The reality is that it will slug remote regions unable to access reliable and competitively priced energy.
?Axing of the fuel tax credit will threaten the viability of existing and proposed resource developments across northern Australia. Diesel fuel is essential for mining, processing and transport. Taxing a major business input is against all Treasury advice. Taxes should apply to profits, not the cost of doing business.?
Roche said that in the current economic climate, other industries that qualify for the fuel tax credit should be looking anxiously at Canberra.
The tax statistics released recently identified fuel tax credits as by far the most expensive offset in the tax system, costing $5.1 billion in 2010-11 and $5.5 billion in 2011-12.
”The argument for it is that the purpose of fuel excise was to pay for roads, and that mining companies get a rebate because they don’t use their vehicles on public roads,” Bank of America Merrill Lynch economist Saul Eslake said. ”I guess there is some merit in that argument, although in my view not enough merit to justify $5.5 billion of revenue foregone.?
Sources: Queensland Resources Council, Sydney Morning Herald, The Age