Australia unveils hefty mining tax

The Australian government has announced a new mining tax that raises the rate to 40 percent. The hike sent shockwaves among the country's mining giants, who are planning to mount a legal challenge to overturn the measure. Australian mining shares tumbled on Monday after the government slapped the industry with a new 40 percent profits tax, prompting global miners to warn that billions of dollars in new projects were at risk. The government unveiled the mining tax on Sunday as part of a shakeup of Australia's complex tax system, arguing that tax revenue from mining has been steadily dropping as a percentage of their rapidly climbing profits over the past 10 years. The tax, to apply from 2012 and aims to make over $11 billion in its first two years, also sent a chill through mergers in the mining sector, with takeover target Macarthur Coal falling as much as 10 percent. Western Australia, the largest mining state, has also warned of investment and job losses from the tax. The government has picked a fight with the country's most important single industry, which accounts for about half of exports, in a gamble that taking money from rich miners and using it to boost workers' pension funds will prove a vote-winner. Well funded, the big end of the Australian mining industry is preparing for battle and will look to the Senate, where the government lacks an outright majority, to block the tax.

• 2010-05-04T09:05:25+00:00
• Duration: 01:31

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Australia unveils hefty mining tax