The New South Wales State Government has pledged to drop its planned $944 million royalties hike if the Federal Government compensated the state for losses incurred with the planned Carbon Tax.

 

"We would drop the mining royalty increase if Canberra provided appropriate compensation to offset the carbon tax, no questions asked," State Treasurer Mike Baird told The Australian.

 

The move will likely be knocked back after the Federal Government threatened to withdraw the state’s GST revenue if the State Government goes through with its royalties hike plan.

 

Under the planned mining and minerals resources rent tax (MMRT), the Federal Government will reimburse any income lost from increases in state based royalties.