The gold mining companies on the ASX were hit hard yesterday by the West Australian government’s budget with a double tax hit.
At the same time big companies – with revenue of $2 billion or more – face higher payroll taxes – that means the likes of BHP Billiton, Fortescue, Rio Tinto.
Gold miners like Newcrest, Independence Group, Northern Star, Evolution, St Barbara will be hit. But for the likes of Newcrest, its mines outside WA will be better treated – mines as Cadia in NSW
The WA Government wants to hit 50 gold producers with a royalties double hit – a move that will have to pass through the state’s upper house
Not only will royalty rates be lifted to 3.75% from 2.5% when the gold price sticks above $1200 an ounce, dozens of producers are set to lose their 2500-ounce annual royalty-free threshold.
The increases are likely to face fierce opposition from the gold mining industry, lobby groups and political rivals sensitive to fears of job losses in the battling gold-producing areas.
A review of gold royalty rates by the previous Coalition government recommended they be increased from 2.5% to 3.75% in a move Treasury assumed would raise an extra $560 million over three years.
Premier Mark McGowan admitted yesterday he had broken an election commitment by imposing the extra tax slugs on gold miners and on bigger corporations through payroll tax hikes.
“We’re sorry about that,” he said. But he said it was fair to ask corporations to share the burden of Budget repair rather than leave the task to families and small business.
The WA Government hopes to impose the new taxes on the gold mining industry from January 1 and raise $60 million by June 30 next year, before raising $120 million in the 2018-19 financial year.
Small gold producers with production of less than 2500oz will remain exempt from the royalty.
But for bigger producers the loss of their 2500oz royalty-free threshold could add $150,000 to their annual royalty bill based on current prices.
WA Treasurer Ben Wyatt’s budget will target bigger companies, but have little impact on the deficit which the budget forecasts to reach a record $43.7 billion by the end of the decade.
A Budget surplus is not expected to materialise until 2020-21 – just in time for the next State election.
Mr Wyatt said the Government had suffered a $5.4 billion hit in revenue since taking office with one of the biggest blows the surprise announcement by the bureau of statistics that WA’s population was 60,000 down on forecasts. The gST shortfall is the prime driver of the pressure on WA finances.
