Media Releases
CME Welcomes Bipartisan Support for Retention of State Royalties
04/02/10
The Chamber of Minerals and Energy of Western Australia (CME) has today welcomed the bipartisan support at a state level for retention of the current state on-shore royalty regime.
CME Chief Executive Mr Reg Howard-Smith said replacing state royalties with a new federal resources tax could see Western Australia miss out on its fair share of the income derived from resource projects in the state.
Responding to speculation that the federal government’s review of Australia’s tax system supports such a concept, Mr Howard-Smith said it is important that income collected as a result of the strength of the Western Australian resource sector is returned to benefit communities in the state.
“The retention of revenue derived from the state is of primary concern, particularly the significant income collected as a result of the strength of the Western Australia resource sector.
“Royalties derived from resource projects are an essential part of state revenue and are required to deliver important services and infrastructure for all Western Australians.
“Suggestions that the federal government may impose a federal resources tax in place of or additional to, state royalties are of serious concern,” Mr Howard-Smith said.
“Royalty rates are an important factor in making decisions about mining projects, including determining which states provide the best operating environment for new investments in resources projects.
“A Federal resources tax could lead to a loss of state control of revenue levers, reduced flexibility and a lack of incentive for state development,” he said.
Mr Howard-Smith said the federal government does not have responsibility for land management and royalties are a rent for the use of resources in Western Australia, not a tax.
“There is no guarantee future federal governments would redistribute proposed centralised royalty revenue in a fair way and Western Australia could be disadvantaged,” he said.
Mr Howard-Smith said while CME supports the general principle of the Henry Tax Review – to improve efficiency and effectiveness of the tax system – any concept which shifts the benefits derived from the Western Australian resource sector out of the state should be rejected.
CME said the State Government collected $3.2 billion in resource royalties in 2008-09. Much of the revenue received from royalties is invested in infrastructure projects and as the basis of the Royalties for Regions program which is returning 25% of all royalties to regional Western Australia.