Tax

Fortescue Metals (ASX:FMG) outgoing chief Andrew Forrest has vented his ire over carbon tax with a warning that the company will launch a High Court challenge if the government green lights the proposal in its current incarnation.

Forrest said that the mining tax was "economic vandalism" and unconstitutional. He said that the legislation favoured the three bigwig miners who can best afford to pay the tax: Rio Tinto, Xstrata and BHP Billiton.

Julia Gillard is under pressure from BHP Billiton's (ASX:BHP) CEO Marius Kloppers over carbon tax compensation. Kloppers is the latest business leader to warn Australia's efforts of cutting carbon emissions on high polluting industries.

Tom Albanese, the chief executive of Rio Tinto (RIO) has stated that the Australian Government will turn into a risky “silent partner” of the Australia based miners through its proposed resource super-profits tax (RSPT) which has created a huge debate throughout the mining industry and believed to have negative impact over the mining sector of the country. Rio Tinto is currently doing as much as it can to prevent the RSPT which it believes will enhance the sovereign risk of Australia.

Peabody Energy, the US based coal company has lowered its bid by as much as $300 million for Australia based Macarthur Coal (MCC), which is being considered as a sign that the Australian miners are losing their value in the market due to the super-profits tax proposed by the government. The reviewed Peabody deal is expected to be “knocked back” by the major Macarthur shareholders.

The proposed super-profit tax over the miners have seen the value of mining companies taking major hit on Tuesday as the sector lost another $7 billion worth of value.

Orica (ORI), the fertiliser and explosives company have lost a court dispute over a large capital gains tax bill from the sale of its pharmaceuticals business over a decade ago in 1998. The company may be forced to pay the $126 million tax bill, but the company has the opportunity to appeal against the decision of Federal Court judge Ross Sundberg. Assuming the decision stands, then in the year that Orica pays the balance of the tax bill its reported net profit will be down $192 million.

Australia's wealthiest people are paying only 25 per cent of their income in tax and are easily avoiding the top personal rate of 47c in the dollar.

The very rich pay less than a third of the tax paid by the nation's highest-paid workers - $28,000 versus $92,000 a year - because they use their investments to minimise income and claim tax breaks not available to regular workers.

The Coalition Government says that only 3 per cent of taxpayers, with taxable incomes above $125,000, will face the top marginal rate of 47c when the thresholds are lifted again on July 1 next year.