The State Cabinet on Tuesday approved a proposal for imposition of Mineral Resource Rent tax on super normal profits earned by miners.
The imposition of such a tax, the state government believes, will ensure equitable distribution of wealth generated from mining activities instead of allowing it to concentrate in the hands of a few merchant miners. The proposal will be sent to the Centre following the Cabinet nod.
The M B Shah Commission of enquiry during its recent visit to the state to probe alleged illegal mining activities, had urged the mine owners to earmark more funds for peripheral development.
Earlier, the state Chief Minister Naveen Patnaik had written to Prime Minister Manmohan Singh, emphasizing the need for imposition of the tax on windfall profits made by miners.
“The Australian government has announced that a Mineral Resource Rent Tax of 30 per cent of iron ore which will be applicable from July 1, 2012. On the same lines, a Mineral Resource Rent Tax should be levied on iron ore to be charged at 50 per cent of the surplus rent and should accrue to the states. As and when surplus rent decreases the tax too will automatically decrease,” Patnaik said in a letter to the Prime Minister in September this year.
Patnaik has argued that the additional royalty will enable the state to invest in infrastructure and jobs to give the community a lasting stake in the prosperity of areas affected by mining.
Moreover by reducing the incentive for excess production from mining leases in violation of statutes and rules, it will ensure conservation of finite resources. The tax will also ensure that profits from the state resources are used for the well being if the community and super normal profits are not made by a few individuals or companies which are engaged in merchant mining, thus ensuring equity.
