The Federal Government's announcement that it will introduce a 40 per cent Resource Super Profits Tax (RSPT) to apply to non-renewable projects from 1 July 2012 has drawn criticism from industry experts.
DLA Phillips Fox energy & resources partner Robert Edel said the tax is likely to have a "serious negative impact" on the resources industry, particularly in relation to foreign direct investment in the mining sector.
"There is a real risk that investment is going to be driven off-shore and it creates lots of uncertainty for existing project developments," he said.
"We are seeing that [uncertainty] now, on a daily basis. Clients are unsure what impact the tax is going to have on their ability to finance and get approval for a huge variety of projects that are currently being worked up. This is an extra slug which effectively takes that tax rate up to 57 per cent."
Edel added that Australia will now become "extremely uncompetitive" on the international stage, as the tax rates are going to be much more attractive in other countries.
Edel said clients are seriously concerned about the impact of the tax, with the firm fielding around 40 enquiries in the last week alone, and believes that the uncertainty will lead to - at the very least - a deferral of projects coming out of major mining houses.
The RSPT will replace existing Commonwealth resource taxes - excepting the Petroleum Resource Rent Tax - including crude oil excise.
States will also be able to retain all royalty revenues, but any state royalties paid by companies will be refunded under the RSPT.
The Government said it hopes that by removing the inhibiting effects of royalties, there will be an increase in mining productivity, jobs and investment.