Ernst & Young Report Says RSPT Based on Wrong Theory

By Joel ScanlonJun 21 2010

Another study commissioned by the Mining industry on the proposed mining tax has found flaws in the Government's proposed mining tax model. The report was given by Ernst & Young says that the Resources Super Profit Tax or RSPT proposed by the federal government is based on a wrong theory.

If put into effect the RSPT will have a negative effect on employment and investment in the mining industry. Chamber of Minerals and Energy of Western Australia and mining giant Xstrata commissioned the report which said that levying the tax will lead to fewer jobs, fall in investment, and lower personal income for employees in the mining industry.

This would be a result of the cancellations and postponements of ongoing and future mining projects in the country. Already the uncertainty surrounding the exact terms of the tax have scared many companies from putting more money into new projects in Australia.

Another fact brought out by the report is that the country accounts for just 13% of global mining exploration. If the mining becomes unprofitable in Australia, there are many geographical alternatives available to the mining companies.