Australia's Queensland state that said it will support Fortescue Metals Group Limited's bid to sue the federal government in the country's top court over a plan to tax iron ore and coal company profits.
Mr Jarrod Bleijie Attorney General told Australian Broadcasting Corporation radio said that "We'll certainly have a go at intervening in this case. While cases in the high court are difficult to win, Queensland had received crown law advice that the Mineral Resource and Rent Tax may be unconstitutional because it discriminates between the states."
Prime Minister Ms Julia Gillard, who is meeting Queensland Premier Mr Campbell Newman in Brisbane, needs revenue from the tax implemented July 1st 2012 as she bids to turn the government's budget to surplus by 2013. The tax will reap about AUD 10.6 billion within three years from Fortescue, BHP Billiton Limited, Rio Tinto Group and other mining companies.
Treasurer Mr Wayne Swan said that the challenge will try to stop the Gillard government spreading the benefits of the mining boom to hundreds of thousands of Queensland households and small businesses who aren't in the fast lane of the nation's economy.
Fortescue is seeking a ruling declaring the tax invalid. The tax discriminates between the states, curtails their sovereignty and restricts their ability to encourage mining.
In 2011, the High Court struck down Ms Gillard's plan to send illegal immigrants who arrive by boat to Malaysia. Tobacco companies are challenging a law that would require cigarettes to be sold in plain packages.
Ms Gillard's agenda has prompted criticism by business leaders ranging from BHP chairman Mr Jacques Nasser to Rio Tinto CEO Mr Tom Albanese to the Australian Chamber of Commerce and Industry.
Fortescue said that the federal tax will have the effect of rendering illusory and inefficacious any determination by a state to differentiate itself from other states or countries.
The company plans to almost triple annual iron ore output from its Western Australian mines to 155 million tonnes by June 2013.
Source - Bloomberg
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