NEW YORK ( TheStreet ) -- Australia's proposed mining tax remains in a state of high flux, the object of intense negotiation between industry chieftains, lobbyists, government ministers and parliamentarians in the Down Under capital of Canberra. Lawmakers, of course, have yet to approve the levy (officially known as the Resources Super Profits Tax). And it's now understood that a final law probably won't be hammered out for months -- maybe not even by the end of the year.
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Needless to say, the tax has raised the hackles of mining executives like nothing, perhaps, since the machinations of David Brower (the late and contentious former head of the Sierra Club). But the resources toll has created about as much confusion as it has controversy. The moving parts are many and intricate. And because the plan remains subject to negotiation, much of what has been publicized will likely change. Case in point: Just today, word out of Australia is that Kevin Rudd, the progressive prime minister who set tax reform in motion and is the mining levy's champion, might have already buckled under the industry's pressure. Rudd is apparently ready to extend "an olive branch" to miners, in the words of the Sydney Morning Herald. "The changes will go some way to meeting the general objections of the mining industry," the newspaper said, citing no sources. Complicating matters further is the fact that, odds are, Australia's biacameral government will probably face elections sometime later this year. Whatever the case, mining companies are hunkering down, bringing in the lobbyists and media propagandists, and preparing for a long battle ahead. At any rate, some clarification and correction is therefore in order: For starters, the current proposal -- which would have the tax take effect on July 1, 2012 -- suggests a 40% levy on the "super profits" of specific mines, and not on the mining corporation itself. That headline 40% rate is perhaps the one figure in the proposal that's the most subject to change. It served, essentially, as a starting point for the government to begin talks with its mineral-extractor constituents, analysts say. Some believe that, when it's all said and done, 30% is the more likely rate.
There's been talk that the Super Profits Tax will replace the present state-by-state royalty system, itself widely viewed as needlessly onerous and confusing. Others have said no, that's not the case: the super tax would come on top of these royalty levies, which now range between rates of 2% and 10% and bring in about eight billion Australian dollars total per year to the country's six states and two territories. According to the government's proposal, though, the feds would pay a tax credit to the mines meant to cover the whole of the state royalty payouts. The royalty vs. super tax argument is also a point of contention, and negotiation, between Australia's states and its feds.