Australian mining companies have lost billions of dollars in share value in the wake of the proposed 40% "super tax on profits" announced by the Government on Sunday.
Shares in resource companies across the Australian market were hard hit, ranging from heavyweight BHP Billiton (down 3%) through to Macarthur Coal, which was down 9.5% at the close of Monday's trading.
The entire sector had $A9 billion ($NZ11.4 billion) wiped off company share values as investors fled.
Yesterday, resource stocks steadily continued to slip, declining in value further, with BHP down 2.1%, Rio Tinto 3.4% and Macarthur 3.3%, about halfway through the trading day.
The Henry review of the Australian tax system, which has 138 recommendations, included the raising of the present tax from 30% to 40% for the resource sector, starting in 2012.
Analysis of the Henry review by ANZ bank researchers in Australia said while the increase to 40% may be seen as a "tax slug" on the resource sector, it was not as harsh as in other countries, such as Norway and the United Kingdom, where the tax was about 50%.
"This tax revenue will be highly dependent on strong demand for commodities from emerging economies continuing for many years to come," the research said.
Craigs Investment Partners broker Peter McIntyre said investors were concerned at the future earnings prospects of the mining companies, with analysts cutting earnings and share price targets for many companies.
"If anything goes awry with the Asia-China economies, that will have a big impact on some of the big resource companies' [earnings]," Mr McIntyre said.
Forsyth Barr broker Suzanne Kinnaird said Australian Treasury forecasts expected the tax to raise $A3 billion in 2012-13 and $A9 billion in 2013-14.
"Effectively, highly profitable projects will pay more tax and less profitable projects will pay less tax than they currently do," she said.
The risk is that the tax would discourage investment in the Australian resource industry, but the Australian Government has tried to deal with this by allowing companies to offset costs, including exploration expenses, against future tax liabilities.
