THE war over the resources super tax has descended into a bitter standoff, with Wayne Swan accusing mining giants of lying about their tax burden.
In an increasingly bitter clash that will taint the upcoming federal election, the Opposition claimed the Treasurer was engaging in the politics of panic and desperation.
Opposition Finance spokesman Andrew Robb said Mr Swan had relied on research from a US student, who belongs to an "I love taxes" website, to claim big miners paid just 13 to 17 per cent tax.
But in a taste of the election fight, the Government hit back.
It accused the Coalition of doing the dirty work of the Minerals Council of Australia to secure "grubby" donations.
Mr Swan said there was an "unprecedented, hysterical scare campaign" under way and accused mining companies of reaping "generous deductions" and "not telling the truth".
Relations between the Government and the mining industry are now at an all-time low.
The uncertainty over the future of the 40 per cent super profits tax has sent jitters through the Queensland economy and Premier Anna Bligh is agitating for changes.
The Queensland Resources Council is warning about $130 billion worth of projects in the state are in limbo.
Rio Tinto chief executive Tom Albanese said the tax had damaged Australia's reputation and the company was reviewing all its Australian investment proposals.
And BHP Billiton's chief financial officer Alex Vanselow said in a statement he was disappointed at the Government for "misrepresentation" over the amount of tax it pays.
Late yesterday, an article by Treasury officials was released to back up the Government's case on taxation rates.
A Treasury executive minute said the article showed "mining had a tax rate 12 per cent below the average for all industries" and it faced an average tax rate of 17 per cent.
But Macarthur Coal chairman Keith De Lacy said Mr Swan's claim was "just plain wrong".
"It is highly misleading, and it is offensive," he said.
The Minerals Council is incensed at Mr Swan's tax rate claims, saying miners pay an average corporate tax rate of 27.81 per cent and when royalties, which will be all but replaced under a tax on profits, were added in, the effective tax rate was 41.3 per cent.
The research paper at the centre of the initial taxation claims was authored by University of North Carolina graduate student Kevin Markle.
"I believe we are clear about what we do in the study and the limitations our findings have for specific public policy issues," Mr Markle said. "It is not for us to dictate how people use the results that we present, but you will not find any policy prescriptions in our paper."
University of North Carolina Professor Douglas Shackelford said the paper, which was cited in the Henry Review, was still a draft.
He admitted the study did not look at royalties and payroll taxes, and focused only on corporate mining tax.
