IN a unanimous decision handed down last week, the High Court of Australia has ruled against Fortescue Metals Group (FMG) in its constitutional challenge to the validity of the Minerals Resource Rent Tax (MRRT).

Despite being ineligible to pay the tax, prominent AREEA member FMG contested the MRRT in July 2012, arguing the tax discriminates between states and defies s51(ii) of the Commonwealth Constitution.

“Fortestcue challenged the MRRT because it is an unreasonable intrusion in an area of state responsibility and that it is also an unfair, discriminatory and complex tax,” chief executive Nev Power said in a statement released last week.

“The mining industry already pays more tax than other sectors, taking into account company tax and state royalties; Fortescue alone expects to pay $1.5bn in company tax this financial year, raising to $2bn in the years ahead.”

FMG was ordered to pay legal fees in the High Court’s decision, in which Chief Justice Robert French argued that “the differential treatment and unequal outcome that is involved here is the product of distinctions that are appropriate and adapted to a proper objective.”

The MRRT, which imposes a 22.5% tax on companies earning more than $75m on iron ore and coal extraction, was projected to raise $2bn in revenue during the 2012-13 financial year, but instead returned just $200m, due to state-based discrepancies.

Mr Power extended gratitude to key constituents of the case, including both the Western Australian and Queensland governments, and opposition leader Tony Abbott for his pre-election promise to abolish the MRRT.

“If you the vote for the Coalition, the mining tax will be gone as of 1 July next year,” Mr Abbott said.

To read the High Court decision, click here.