As with any other proposition lies the advantage and disadvantage of it.
Queensland, in a bid to hit its target of a A$1.6 billion ($1.66 billion) in extra revenue as well as reclaim its AAA credit rating, announced on Tuesday plans to raise the royalty on coal beginning October.
The Australian state of Queensland's AA1 credit rating has been downgraded from stable to negative by international ratings agency Moody's Investors Service, and is unlikely to revert any time soon to its former AAA rating.
Just a day after miners announced it will slash manpower due to falling prices of commodities in the world market coupled with rising administrative costs, and just after a month after one of its biggest miners shelved its expansion plans on a mega mining project, here goes the pronouncement of Australia's Queensland government, which is already tantamount to the saying "killing the goose that laid the golden eggs."
"The worse-than-feared hike in coal royalties announced in today's Queensland budget means more job losses, the risk of further mine closures and the near certainty that numerous major new coal projects will not see the light of day," Michael Roche, chief executive of Queensland Resources Council, told reporters outside parliament on Tuesday. The council is an industry body representing the mining firms whose members include BHP Billiton, Anglo American, Rio Tinto and Xstrata, among others.
The Queensland state government plans to increase the rate on coal royalties to 12.5 per cent for prices between A$100 and A$150 per tonne ($100-$150/tonne). Anything higher will be taxed 15 per cent.
"We have had to make the hard decisions necessary to get the great state of Queensland's finances back on track and back in the black," Treasurer Tim Nicholls told the state parliament in Brisbane. "This afternoon we reset the clock and we break from the addiction to debt and deficit that characterised Queensland's finances under Labor."
The coal hike will aid the state government to raise A$1.6 billion over four years.
"Queensland already had one of the world's highest comparable coal royalty regimes," BHP said.
"We made it clear to the Queensland government that in the current environment any additional taxation impost will directly impact the profitability of our current operations and will affect business decisions on capital growth allocations in the state."
Wanting to reclaim its coveted triple-A status, Queensland wants to stabilise its debt around A$83 billion by 2015/16.
"Queensland has been bankrupted -- is on the way to being bankrupted -- by poor and reckless financial management," Premier Campbell Newman had said in July. "I'm saying that if we'd failed to act in the way that we are, that Queensland would ultimately be the Spain of Australian states."
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