Reacting strongly to the central government's denial to consider a windfall tax proposal sent by the Orissa government, Chief Minister Naveen Patnaik on Monday shot off a letter to the Union Ministry of Mines, questioning the veracity of the causes cited by the ministry for refusing the proposal.
“I am, indeed, surprised and disappointed with the reply of the Ministry of Mines to a legitimate request of the state government,” Patnaik said in the letter addressed to Union mines minister Dinsha Patel.
“To agree that the iron ore prices have increased to $145-150/ tonne in 2011 ( from $69 in 2007) and at the same time stating that existence of super normal profit needs a closer look ignoring readily available data, appears to me to be a dilatory tactic to deny the state's request,” the letter further added.
To strengthen his arguments, the Orissa chief minister, who is also a former Union mines minister, said that the Centre was quick to increase rail freight rates and export duty following the boom in mineral prices, but is dragging its feet in case of levying super profit tax for the states.
In November last year, Orissa proposed to levy a super normal profit tax for miners in line with the steps taken by the Australian government, termed as Mineral Rent Resource Tax. The state had proposed that the miners will have to share 50 per cent of the surplus rent to the local community form where they mine for social development.
The Union Ministry of Mines, in January, had rejected the state government's proposal on the grounds that it was impossible to determine whether the miners were actually making supernormal profit given the higher transportation and handling cost, due to poor mining infrastructure of the state. The state government, in its letter to the Mines Ministry, passed the buck to the Central government regarding mineral infrastructure development.
“In terms of MMDR Act, it is the duty of the Central Government to take all such steps as may be necessary for the conservation and systematic development of minerals in the country,” the letter said.