BHP Billiton is cautious about the state of the world economy and is warning governments to be careful about tax changes and winding back stimulus packages.

Mr Don Argus chairman of BHP Billiton said that "We remain cautious about the state of the global economy and note the recent International Monetary Fund report which highlighted the gap in growth between developed and developing economies.”

He said that "The IMF predicts that between 2007 and 2011 the output from advanced economies will grow by just 1.9% while the developing countries will be 22.1%.”

Mr Argus said most countries have difficult decisions to make regarding winding back stimulus packages and in a possible reference to Australia's Henry taxation review warned them about making tax changes.

Mr Argus said that "It is imperative that the impact of any policy and tax changes of governments around the world on sectors of economies should be well understood and do not hinder investment and the capacity of economies to grow. Ultimately policies which reduce free cash flow available from profits generated after paying tax could affect a company's capacity to pay future dividends to shareholders.”

According to the reports, the Henry review which was handed to the Federal Government in December, recommended scrapping state based royalties on mining projects and replacing them with a resource rent tax, set at 40%.

The tax change would raise billions more in revenue than the current system and could reportedly cost mining giants BHP Billiton Ltd and Rio Tinto Ltd a combined USD 5 billion in earnings a year.

The world's largest resources company plans to spend about USD 20 billion on capital expenditure next year,

(Sourced from www.adelaidenow.com.au)