No tax on existing investments: BHP

BHP Billiton’s newly appointed chairman says the federal government’s proposed 40% tax on super profits must only apply to new investments and the proposed tax may threaten Australia’s competitiveness and jeopardise future investments.

In his first letter to shareholders since being appointed chairman in late March, Jac Nasser said BHP had no issue with a review and reform of the tax system, but any reform must be conducted around sound principles.
“Any reform proposal must only apply to new investments, not existing investments,” he said.
“Additionally any reform should not disadvantage the resource industry compared to other industries in Australia, and it absolutely must not disadvantage the Australian resources industry compared to other countries.
“In other words, any reform must not destroy the necessary incentives to keep investing in Australia’s growth engine, the resources industry.”
In 2009, BHP paid $A6.3 billion in taxes of which $3 billion was paid to federal government company taxes, $1.9 billion to state government royalties, and $1.45 billion to federal government petroleum taxes.
Nassar noted that the government’s proposed 40% tax on super profits would increase the total effective tax rate on BHP’s Australian profits by 14% to 57%, which compared to tax rates of 23% and a range of 27-38% in Canada and Brazil respectively.
He also warned that the proposed tax may threaten Australia’s competitiveness and jeopardise future investments.
“The risk is that Australia could now be seen by the rest of the world as a less stable and less competitive place for long-term investments,” Nassar said.
“If [the proposed tax] eventuates, the great work of Australians to build the strong economic foundation of the country over decades could be undermined, representing a crucial turning point for Australia.”
The world’s biggest miner is reviewing its Australian operations and investment plans in light of the proposed tax and will hold shareholder information sessions around Australia to update shareholders on its plans.
Meanwhile, a full-page advertisement titled “An open letter to the prime minister from the WA business community” appeared in today’s the West Australian newspaper.
The advertisement outlined the Western Australian business community’s concern about the impact of the proposed tax on the resources sector.
“As major employers in this state, we know that our success, like the success of so many others, big and small, depends on a strong and successful resources sector,” the advert said.
“We don’t want that put at risk.
“We ask you to re-think your decision to impose a damaging tax on one of Australia’s key industries.”
The advertisement was sponsored by the WA Chamber of Commerce and Industry and was signed by mining executives, including Fortescue Metals Group executive director Andre Forrest, BHP Billiton Iron Ore president Ian Ashby, Rio Tinto Iron Ore executive director and chief executive Sam Walsh, and Hancock Prospecting chairman Gina Rinehart.
Shares in BHP were trading $1.31 lower at $37.33.

 

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