CANBERRA, Nov 5 (Reuters) - Australia’s High Court agreed on Monday to hear a challenge against a tax on mining profits in early 2013, as the government stood by its revenue forecasts for the tax despite a drop in commodities prices due to slower growth in China.
Mining magnate Andrew Forrest and his Fortescue Metals Group are leading the High Court challenge against the 30 percent minerals resource rent tax (MRRT), which started on July 1 this year in the face of industry and political opposition.
Australia’s third-largest iron ore miner believes the tax is unconstitutional as only state governments can impose royalties. The government has said it will strongly defend the tax, and was careful to ensure the tax was on mining profits and not On production.
In a directions hearing, High Court Chief Justice Robert French referred the issue to the court’s full bench, with hearings expected to start in March, 2013.
The tax on iron ore and coal profits was designed by the government and global miners BHP Billiton, Rio Tinto and Xstrata after a brutal political campaign and warnings it would cripple Australia’s resources sector.
In its mid-year budget update in October, the government forecast the tax would bring in A$2 billion ($2.07 billion) in the current financial year, down from the A$3 billion May budget forecast, and raise A$9.1 billion over four years.
But media reports said global miners reported no liability for the tax in its first three months, while private forecasters Deloitte Access Economics on Monday said the tax would fall well short of Treasury’s revenue estimates due to lower world commodity prices and a strong Australian dollar.
“That mix means the MRRT will have a dog of a year -- when China sneezes, the MRRT was always going to get pneumonia,” Deloitte Access economist Chris Richardson said.
He said any drop in mining tax revenue would threaten the government’s target of delivering a A$1.1 billion budget surplus for the financial year to June 30, 2013.
Trade Minister Craig Emerson defended the Treasury forecasts and said the government would still deliver a surplus budget.
“We take note of the forecast provided by officials and we stand by those forecasts: we stand by the MYEFO, the Mid-year Economic and Fiscal Outlook. We’re on track for a surplus and they’re the figures that we stand by,” Emerson said on Monday.