MRRT High Court challenge begins .. Australian uber rich grab .. as everywhere ..
AAP Updated March 6, 2013, 9:20 am
Andrew Forrest. Picture: Bill Hatto/The West Australian.
UPDATE 1pm: A lawyer for mining magnate Andrew “Twiggy” Forrest says the Federal Government's mining tax breaches the constitution and nothing can be done to bring it back from the dead.
"It is not revived or quickened by being put through the crematorium of this court,” counsel for the Fortescue Metals Group, David Jackson QC, told High Court judges today.
Mr Forrest wasn't in court for the start of the case that pits his Fortescue Metals Group against the Commonwealth of Australia over the validity of the Minerals Resources Rent Tax (MRRT).
The full court of the High Court, sitting in Canberra, has set down three days to hear the case.
At one point, Justice Kenneth Hayne observed: “Nothing is unduly simple in this.”
Mr Forrest has vigorously opposed the MRRT from the outset.
He foreshadowed a legal challenge last year - long before the government revealed just how little the MRRT raised in its first six months.
To the end of December 2012, the tax garnered $126 million from miners against a full-year forecast of $2 billion.
Fortescue expects to pay no MRRT this year.
Opening the case, Mr Jackson said Fortescue did not dispute the commonwealth's power to raise tax.
But the company was challenging the validity of the MRRT on grounds that it contravened a provision of the constitution which stipulates tax must be applied equally to all states.
"It discriminates against the states in that it gives rise to a preference to some states,” Mr Jackson said.
He argued the MRRT was levied differently in each state because of the variation in mining royalties which are offset against tax liabilities.
The commonwealth, represented by Solicitor-General Justin Gleeson, has yet to present its case.
But it will argue the tax is constitutional because it is imposed at a uniform rate regardless of a mine's location.
Royalties were deemed merely one type of allowance for which a miner can calculate deductions in calculating MRRT liability.
The MRRT is levied at the rate of 22.5 per cent on total profits over $75 million derived from extraction of iron ore, coal and coal-seam gas.
Mining companies can reduce MRRT liability through claiming certain expenditure including royalty payments to state governments.
The case has attracted considerable interest with the solicitors-general for Queensland and WA granted leave to intervene.
It's being heard by six of the court's seven judges after Justice Stephen Gageler excused himself on grounds that he provided legal advice to the commonwealth on the MRRT when he was solicitor-general.
Andrew Tillett Canberra, The West Australian March 7, 2013, 5:29 am
High Court justices have cast doubt on a key plank of Andrew Forrest's constitutional challenge to the mining tax as hearings opened yesterday.
Lawyers for Fortescue Metals Group spent much of the day arguing that the minerals resource rent tax is unconstitutional because it discriminates between the States on taxation grounds.
But they appeared on stronger ground with their claim the MRRT was a "crude form of control" by Canberra and hampered the States' ability to discount royalties to encourage mining development.
Fortescue has not paid a cent of the mining tax but the company launched an eleventh-hour High Court challenge last year on June 22, just days before the tax commenced.
Counsel for the company, David Jackson, told the court the heart of Fortescue's argument was a miner's MRRT liability was levied differently in each State because the States set different royalty rates.
As royalties were deductible against a company's mining tax bill, a lower royalty rate meant a company paid more MRRT, and vice versa, despite section 51 of the Constitution requiring Commonwealth taxes to be imposed equally across the States.
But several justices appeared sceptical about this, pointing out to Mr Jackson that companies were able to claim a range of deductions that reduced what they paid in company tax.
Justice Kenneth Hayne cited how States set different rates of workers compensation premiums paid for by companies.
The justices did not quiz Mr Jackson as much about a second constitutional argument. He said the mining tax curtailed a State's ability to encourage the development of mines by discounting or waiving royalties because this would result in a corresponding increase in MRRT liability.
The hearing got off to an amusing start when WA Solicitor-General Grant Donaldson unsuccessfully tried to have WA budget papers, 1960s parliamentary speeches and extracts from company agreements between miners and the State Government added to submissions to show WA had a lot of iron ore deposits and mining was crucial to the economy.
Chief Justice Robert French, a West Australian, replied drolly: "We've worked out that for ourselves."
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