Australia govt to detail tax, mining changes soon

CANBERRA Jan 22 (Reuters) - Australia's government will soon unveil a report recommending a sweeping tax overhaul, Treasurer Wayne Swan said on Friday in response to newspaper reports that plans included a big increase in mining royalties.

Treasury Chief Ken Henry has recommended scrapping the state royalty taxes that apply to mining projects and replacing them with a uniform national resource rent tax, injecting billions of extra dollars into government coffers, a newspaper report said.

"I'm not going to speculate about what may or may not be in the Henry report," Swan told state radio in response to a report in the Sydney Morning Herald, which knocked the price of mining shares in London.

"It's a comprehensive report, it covers the entire taxation system. We said we will release the report after we have examined it, and we'll do that early this year with an initial response," Swan said.

Australia's complicated tax system netted A$278 billion ($251.6 billion) last year, with company and resource rent tax contributing A$56 billion or 21 percent. Australia's 30 percent corporate tax rate is the eighth highest in the OECD.

The new resource tax, likely to be set at 40 percent, would be based on the petroleum resource rent tax levied on products, including crude oil and natural gas, mined in Australian waters other than the lucrative North-West Shelf and a jointly developed area between Australia and East Timor.

Treasury modelling suggested that if the petroleum tax formula had been applied to resources such as iron ore and coal, and to companies including BHP Billiton (BHP.AX) and Woodside Petroleum (WPL.AX) over the past three years, it would have raised an extra A$14 billion, the Herald said.

The government commissioned the Henry review last year and received the report in December, promising a response before the May 12 Budget.

Any suggestion of an increase in resource rent taxes would run into fierce opposition from miners, already fuming over government plans for an emissions trading system hitting 1,000 of the country's biggest polluting companies.

London mining stocks were already down on worries about monetary tightening in China, the world's biggest consumer of metals, when the report appeared.

Rio Tinto (RIO.L) (RIO.AX) closed 4.7 percent lower and BHP Billiton (BLT.L) (BHP.AX), the world's biggest mining group, shed 3.1 percent. The DJ STOXX European basic resources index .SXPP lost 3.9 percent, making it the worst performer in the DJ STOXX 600 .STOXX.

Anglo American (AAL.L) was the third biggest decliner in the blue chip FTSE 100 .FTSE index, tumbling 6.1 percent, although it has less exposure to Australia than BHP and Rio.

BHP Billiton declined to comment on the newspaper article. ($1=1.105 Australian Dollars) (Reporting by Rob Taylor; editing by Tim Pearce)