OREANDA-NEWS. The Australian government's review of the federation system of government sees no need to change the way mining royalties are applied.

The review is largely a study of the tax system as Canberra has the largest taxation power taking more than 80pc of the country's total tax income.

The recommendation of no change to mining royalties, which are set by Australia's state governments follows the decision last year by the Liberal-National coalition government to repeal the federal mining tax, also known as the Mineral Resource Rent Tax (MRRT), on iron ore and coal producers.

The federal government also has a tax review under way. The Australian Industry (Ai) Group said in a submission to the government's tax review that Canberra should look at the prospect of replacing state-based royalties on minerals such as coal and iron ore with a federal profits-based mining tax.

The Liberal-National government repealed the MRRT last September. The MRRT was brought in by the former Labor-led government and came into law on 1 July 2012 following a bitter debate. The Western Australia, Queensland and New South Wales state governments each accused Canberra of intruding into their tax jurisdiction, as the states and not the federal government own onshore minerals.