Australia's upper house of parliament, the Senate, voted on Monday night to approve a controversial legislation that imposes a 30 per cent tax on iron ore and coal mining companies, clearing the final hurdle for the legislation to become law.
The measure cleared the Senate in a 38 to 32 vote with backing the ruling Labor party and the Greens party, marking a significant victory for Prime Minister Julia Gillard. The Mineral Resources Rent Tax (MRRT) Bill 2011 and related bills will now be forwarded to the governor-general for royal assent, which is considered to be just a formality.
The new mining tax will come into force on July 1, 2012. With the new tax, the Australian government hopes to raise about A$10.6bn ($11.2bn) from major mining companies over the next three years. It is planning to distribute that revenue among less well-off sectors of the country's economy.
Among many others, the Australian government plans to use funds generated by the new tax for reducing company tax rate from 30% to 29%, developing infrastructure such as roads, rail and ports as well as enhancing the amount paid to people's retirement savings from the current 9% of their salary to 12% by 2020.
"This important reform will provide a revenue stream to ensure that businesses in particular that are not in the fast lane of the resources boom get some tax relief," Treasurer Wayne Swan reportedly said in her address to the Parliament.
Nevertheless, the country's conservative opposition coalition believes that the new mining tax along with the recently approved carbon tax would drive investors away from Australia, resulting in the loss of thousands of jobs.
The new carbon tax, which was approved by the Senate in November, impose a fine of Australian $23 (US$24) for each ton of carbon emitted by the country's 500 heaviest polluters. The new carbon tax, which also comes into force on July 1, is aimed at reducing the country's greenhouse emissions by five per cent in the next ten years.
Opposition Leader Tony Abbott said Monday that the two new taxes would hurt families by causing wide-spread job loses and pledged to repeal both taxes if his coalition is voted to power in the next general elections.
"The Labor party always chooses to celebrate when they are hitting us with a big new tax. Come July 1 Australians will be hit with two big new taxes - the mining tax and the carbon tax . . . there's absolutely nothing to be proud of," he said.
However, Prime Minister Gillard criticized the opposition's stand against the two taxes, saying: "I have put up with months and months of scoffing about the carbon price - guess what? It's the law of Australia today. I have put up with months and months of scoffing about the mineral resource rent tax. Guess what - it went through the Senate last night."
Regarding the opposition's plans to vote against a government-proposed cut to the large company tax rate, she said: "Before we start on a process of months and months of scoffing about whether or not we will get through the company tax cuts, I think I'm entitled to go (to the) scoreboard and at the moment it's running more in my favor than yours."
She also defended the planned cuts to the company tax rates and accused the opposition of "standing up for the interests of a privileged few, whereas we are working to share the benefits of the boom right around the country."
Initially, the ruling Labor Party had proposed a 40% mining tax. But after industry-wide opposition to the move resulted in the downfall of former prime minister Kevin Rudd, Gillard negotiated the 30% tax with mining giants like BHP Billiton, Rio Tinto and Xtrata.
Although some smaller mining companies and the opposition have threatened to challenge the new mining tax legally, Finance Minister Penny Wong expressed confidence on Monday that the new tax would be able to survive any High Court challenge launched against it.
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