Mining tax passed by parliament: Australia

SYDNEY: Prime Minister Julia Gillard on Tuesday defended a controversial tax on Australia's China-fuelled mining boom after parliament passed it into law, as she faced down the prospect of a court challenge.

The tax has been disputed since it was first announced by then prime minister Kevin Rudd in May 2010, triggering a backlash from the powerful mining industry, which contributed to his ouster as leader.

The conservative opposition has vowed to repeal the tax if it is elected, with critics charging that it will drive investment overseas and make Australia more reliant than ever on growth in its biggest trading partner China.

But Gillard said the government wanted the benefits of the country's vast resources wealth to go to all Australians, not just "the privileged few".

The tax is due to start on July 1 and is expected to generate Aus$11 billion (US$11.7 billion) in its first three years, which the government plans to put towards funding infrastructure, pensions and tax cuts for small businesses.

"Australians know how important the mining industry is, but they also know that we can only dig up and sell the resources once," Gillard said in a statement.

"The Minerals Resource Rent Tax (MRRT) will deliver Australians with a fair return on the resources they own 100 percent," she said.

Australia is the world's biggest exporter of the iron ore and coking coal used in steelmaking, and the second-biggest exporter of thermal coal used in power stations.

Legislation that imposes a 30 percent tax on the extraordinary profits of coal and iron ore miners passed the upper house Senate late Monday by 38 votes to 32, with the government winning the key support of the Greens party. The tax will kick in when a company makes Aus$75 million per year in profit.

The Labor government originally wanted a 40 percent tax on all profits generated by resources firms as the nation enjoys unprecedented demand for its huge mineral deposits, mostly from rapidly industrialising Asia.

But this was scrapped in favour of a 30 percent tax only on so-called super-profits from iron ore and coal, after an intense lobbying campaign from the powerful and wealthy mining industry, led by BHP, Rio Tinto and Xstrata.