MRRT should be scrapped: coalition

New calculations on the mining tax say it will raise $5 billion less than the government predicted. Source: AAP

A COALITION-LED parliamentary committee recommends the mining tax be scrapped and blames Prime Minister Julia Gillard and Treasurer Wayne Swan for the poor design of the impost.

But a dissenting report from Labor senators says the inquiry into the first six months' operation of the minerals resource rent tax (MRRT) was done in haste and the final report read like a submission from the Minerals Council of Australia (MCA).

The Senate Economics References Committee released on Monday its report on the development and operation of the MRRT, with four coalition members out of nine slamming the government for the tax.

"The overwhelming evidence received by this inquiry confirms that the prime minister and the treasurer have only got themselves to blame for the mining tax fiasco in general and the massive budget black hole from the MRRT in particular," committee chair and Liberal senator David Bushby said.

Senator Bushby said the committee's considered view was Labor knew it had overestimated revenue from the tax and underestimated the impact of concessions during negotiations with big miners BHP Billiton, Rio Tinto and Xstrata in 2010.

The design of the MRRT was mainly to blame for the huge revenue shortfall against the estimates of Treasury, he added.

The Parliamentary Budget Office on Monday projected the MRRT would raise $800 million in 2012/13 - less than half the $2 billion forecast by Treasury and after the impost produced just $126 million in its first six months.

"The committee remains strongly of the view that the MRRT is beyond repair and should be scrapped," Senator Bushby said.

Deputy chair Mark Bishop said the majority report was an intensely political document and it did not reflect the facts presented to the committee.

"The majority report was designed in haste, drafted in isolation, inconsistent with the evidence, flawed in approach and unhelpful to any serious players in the mining industry," the West Australian Liberal senator said.

NSW Labor senator Doug Cameron said the coalition senators had accepted with little scrutiny the submissions of the Minerals Council and mining companies.

The Australian Greens in their dissenting report called for the government to raise the tax rate to 40 per cent, from 30 per cent, plug loopholes and expand it to all minerals, rather than just iron ore and coal.

If that was done, the PBO estimates the tax would raise $26.2 billion between 2013/14 and 2016/17.

The softer forecast puts another dent in Mr Swan's revenues, which are already under pressure from the high Australian dollar and lower company tax takings, ahead of the May 14 budget.

"The treasurer will update all forecasts on budget night in the usual way," Mr Swan's spokeswoman told AAP.

Minerals Council of Australia chief Mitch Hooke wasn't surprised by the PBO estimates because of the impact of the high dollar and lower commodity prices.

"As for the Greens' position, well I'm getting a bit jack of this," he told ABC radio.

"You can't get tax out of profits if the profits aren't there."

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