According to the statement released by the National Party of Western Australia, its newly appointed leader Brendon Grylls has announced a tax proposal to raise the 25 cent production rental in the State Agreements with the miners Rio Tinto and BHP Billiton to A$5/mt. This proposed increase would add A$7.2 billion to the state's budget over a four-year period.
The Minerals Council of Australia (MCA) said this hike "would mean that Australia's effective tax rate on iron ore would be three times larger than that of Brazil", the country's largest competitor.
The MCA statement indicated that the Nationals leader's claim that major iron producers only pay a rental of 25 cents per metric ton for iron ore production is wrong. The truth is that major Western Australian producers' total royalty and income tax contribution to the state and federal governments is A$17.50/mt. In 2014-15, Rio Tinto and BHP Billiton contributed A$3.2 billion in royalties to the government and a further A$259 million in other state government taxes.
Mike Henry, BHP's president of minerals in Australia, warned that the mining tax proposal has put jobs at risk and threatens to undermine future investment in the Western Australian iron ore business.