Resources tax will hurt the very people it’s meant to help: iron ore chief

In an open letter to Prime Minister Kevin Rudd, which was published in state and national newspapers, Flanagan said the tax plan ignored the economic and financial realities governing Australia’s biggest industry.
“Why would investors put their money into a project from which the Government will snatch up to 57 per cent of the profit when they can invest in developments overseas with higher returns?” Flanagan asked.
“The answer is, they won’t.”
Flanagan, who was one of several mining executives who attended a dinner function with Mr Rudd in Perth recently, said in the letter that the Prime Minister’s resource tax was a misguided attempt to play Robin Hood.
“It is a flawed and ultimately highly destructive attempt to redistribute wealth from those involved directly in the resources industry to those with supposedly no link to it,” he said.
“The problem, Prime Minister, is that no such person exists in Australia. Everyone, to one extent or another, relies on the resources industry to help underpin their living standards.
“Therefore, your Resource Super Tax plan is going to inflict significant and, in many cases, unaffordable damage on the very people you claim it is designed to help.”
Flanagan was reported last month as saying that some parts of the resources industry could afford to contribute more to Government coffers. He said then that this extra money should be used to ensure that world-class essential services, particularly health and education, were available to all.
But in his letter to Kevin Rudd, Flanagan said the resources tax was a complete overkill that would ultimately damage the ability of governments to provide these services.
“I urge you in the strongest and most genuine terms to rethink your plan to impose a super tax on Australia’s resources industry,” he said.
“The astronomical level of tax you plan to impose on resource projects will swamp the engine room of not only the WA economy, but that of the nation.
“Make no mistake. This imposition will be crippling - crippling because it will cause some projects to shut down altogether and some to wind back. Others will simply not start in the first place.”

About Atlas Iron Limited
Atlas Iron Limited is mining and exporting from its 100 per cent-owned Pardoo Iron Ore project, located 75 kilometres by road from Port Hedland in the Pilbara region of Western Australia. The company is targeting exports at an annualised rate of 6 million tonnes by the end of 2010, growing to 12 million tonnes by 2012.