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Naveen asks PM to impose mineral resource rent tax on iron ore

Bhubaneswar: Seeking early revision of royalty in view of `super normal profits` made by mine owners, Chief Minister Naveen Patnaik has asked Prime Minister Manmohan Singh to impose a mineral resource tax on iron ore.

Stating that `insatiable demand` for iron ore in export market has made it highly profitable with returns from mining far in excess of economically acceptable rates, Patnaik in a letter to Singh said the profits being made is unheard in any other industry.

"This has led to a situation where inspite of the state being the owners of the resources, the mine owners are benefitting beyond any measure of resonable returns," he said.

"I am concerned about the huge profits accruing to merchant mining companies, a large number of which are in private hands. In fact the large profits being made by private mining companies, disproportionate to any effort made," has triggered demand "from various groups to nationalise mineral resources," the chief minister pointed out.

As owner of iron ore resources which are non-renewable and can be extracted only once, it is important that the super normal profits from natural resources do not go to a few hands and that the community gets the fair return, he said.

The surplus rent should accrue to the state which can be utilised for improving social and physical infrastructure, strengthen welfare measures besides improving livelihood of the people, he said.

"The Australian government has announced that Mineral Resource Rent Tax of 30 per cent on iron ore which will be applicable from July 1, 2012. On the same line, 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," he said.

While the additional royalty will enable the state to invest in infrastructure and create jobs for community affected by mining, by reducing the incentive for excess production from mining leases in violation of statutes and rules will ensure conservation of finite resources, he suggested.

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