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UPDATE 1-Fortescue challenges Australia mining tax
* Minerals Resource Rent tax comes into effect July 1
* Fortescue vocal opponent, says unconstitutional
* Tax expected to reap almost $10 bln over 3 years
SYDNEY, June 22 (Reuters) - Australia's third largest iron ore miner Fortescue Metals Group launched a legal challenge to the country's new 30 percent mining tax on Friday, just a week before the new tax on iron ore and coal mine profits begins.
After 18 months of acrimonious debate that brought down former prime minister Kevin Rudd, the 30 percent Minerals Resource Rent Tax (MRRT) was passed earlier this year by Prime Minister Julia Gillard's minority government.
Fortescue and its billionaire founder, Andrew "Twiggy" Forrest, have been vocal opponents of the tax, arguing it was unfair on small and mid-sized miners and had been stitched up by the government and top miners BHP Billiton , Rio Tinto and Xstrata.
"We believe we have a good case for challenging the MRRT on constitutional grounds and we look forward to the resolution of these important issues by the High Court," Fortescue Chief Executive Nev Power said in a statement.
The government has said the new mining tax will apply to about 30 companies, and will have an effective rate of 22.5 percent when mining allowances are taken into account. The tax liability will be phased in for mining companies with annual profits above A$75 million ($76 million).
The tax is expected to reap A$9.7 billion over its first three years, which will help the unpopular government return its budget to a small promised surplus by July 2013 and ahead of elections, due in late 2013.
In drafting the laws, the government was careful to consider whether the plan to tax resource profits was constitutional, as only state governments have the right to impose royalties.
The government will strongly defend the tax, which starts on July 1.
"Mr Forrest has made it clear that he is staunchly opposed to the government delivering the MRRT to help tackle the patchwork pressures in our economy," a spokesman for Treasurer Wayne Swan told Reuters.
"The Government is determined to deliver the MRRT to help tackle these patchwork pressures, deliver tax relief for millions of small businesses and invest in critical productivity-enhancing infrastructure."
The conservative opposition, which is well ahead in opinion polls, has promised to scrap the tax if it wins power.
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