The Australia Institute has called for support of the proposed iron ore tax in Western Australia, considering it “fair” and “affordable”.

Nationals leader Brendon Grylls has pushed for an increased iron ore levy from 25 cents a tonne to $5 on BHP and Rio Tinto to counter the state’s budget deficit.

Following an assessment of the proposal, the Institute found that if the increased tax had been imposed over the last five years, it could have raised $11.5 billion for the state.

Ben Oquist, executive director of The Australia Institute, said, “The iron ore mines that would pay the proposed fee have very low costs of production, with costs ranging from -20 per tonne. With the price outlook at -54 through to 2020, a $5 per tonne levy is very reasonable, affordable and fair.”

Oquist added that it would not impact employment in the region.

“Because the increased levy would create no incentive for the highly profitable mines to reduce production, it is unlikely to lead to any reduction of employment in Pilbara mining,” he said.

“Western Australia is facing a revenue crisis, and this measure would raise around $2.8 billion per year. Our analysis finds that if those additional state revenues were invested in infrastructure projects, they would create an estimated 4600 jobs.”

However, the proposed tax has been slammed by BHP for its potential to affect investment, jobs and the company’s competitiveness.

A recent Deloitte report, commissioned by the Minerals Council of Australia, also indicated that the tax would cost 7200 jobs and see the Australian economy shrink by $2.9 billion a year.


Creat from australianmining.com.au