The Australian High Court has rejected the challenge of the mining tax's validity led by Andrew Forrest's Fortescue Metals. Aside from raising negligible revenue, the imposition of the minerals resource rent tax has upset miners who argued that they are already paying royalties to state governments, including income tax to the federal government.

The mining tax, said to generate huge profits, becomes a liability to a miner who generates a yearly profit of $75 million or more after other charges have been deducted.

According to Fortescue Metals, the said mining tax should be declared invalid for various reasons, including the tax cuts across the rights of the state in the execution of their functions.

The High Court made a unanimous decision and dismissed the challenge case. According to the court ruling, the treatment of state mining royalties by the MRRT Act does not cause discrimination between the states. The court also said the MRRT act did not give preferential treatment to one state over another.

Lawyers who represented the federal government rejected the claims of Fortescue's legal representatives and said that the mining tax had prevented the states from developing their resources. Before the court, Fortescue's lawyers had contended that the federal government had "punished" the states for reducing royalties for companies imposing the tax.

Fortescue Metals was disappointed by the Australian High Court's ruling and emphasised the "very low" revenues collected from the mining tax was a vindication of the company's opposition.

Neville Power, Fortescue managing director, said in a statement that Fortescue challenged the mining tax or MRRT because it was deemed to be an unreasonable interference in state responsibility. The company also said the mining tax was also discriminatory and complex in nature.

Fortescue said the mining tax was an inefficient and burdensome tax. The company has incurred $5 million of costs just to comply with the requirements of the mining tax. The mining sector has already paid a high amount of tax, including company tax and mining royalties to state governments.

If the Coalition will win in the coming federal elections, Opposition leader Tony Abbott has promised to repeal the mining tax. Mr. Abbott said the low level of revenue from the said mining tax was an example of the Labor government's failure to manage the economy.

Treasurer Chris Bowen welcomed the ruling of the High Court and said he would not change the tax if Labor and Kevin Rudd will remain in power.

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