Treasurer Wayne Swan has admitted that resource companies had legitimate concerns, undermining the government's $38 million attack on the Minerals Council of Australia's vocal media campaign.
Mr Swan has also conceded that some miners could be paying up to 58 per cent tax under the federal government's proposed resource profits levy.
Speaking to the ABC's Four Corners program Mr Swan admitted some resource companies could be paying up to 58 per cent tax, as the mining lobby suggests.
"Well there would be some super profitable companies that could reach that level," Mr Swan said.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
He also conceded that miners had a point, as the government prepares to hold a community cabinet in Perth to quell concerns in resources-rich Western Australia about the tax.
Swan accepts concerns
"I accept that they have concerns about the tax. Yeah, some of the concerns are legitimate and that's why we said we'd work our way through all of the issues," Mr Swan said.
The other side of the debate has also made a concession, with mining magnate Clive Palmer admitting he exaggerated the effects of the tax.
In May, the Mineralogy boss said the tax proposal had made him cancel two iron ore projects in Western Australia's Pilbara region, which would have employed 5,000 people.
But asked on ABC Television if he had exaggerated the threat, Mr Palmer said: "Probably. It should've been, you know, slowing them down, waiting to see what happens."
Tax supporter and Australian Workers' Union chief Paul Howes - who debated Mr Palmer at the National Press Club - said changes could be made to the proposal.
"I'm not ideologically wedded to the design of this tax the way it is, and I think there should be negotiations and discussion with the industry," he told ABC Television.
Mining companies declare war
The government and the Minerals Council of Australia have engaged in a bitter public war since May about how much miners really pay in tax.
The lobby group for the miners has already produced radio and television advertisements alleging its clients would be paying 58 per cent tax under the Rudd government's proposal.
They lumped the planned 40 per cent resource profits tax with company tax and state-based royalties - which Canberra plans to rebate them for - to arrive at their calculation.
The government hit back with $38 million worth of taxpayer-funded ads.
They have argued that multinational resources giants pay less company tax than industries like manufacturing and had seen their tax contributions halve during the past decade.
Labor has hinted it could adjust the profit threshold at which the tax would kick in from the proposed level of six per cent.
Resources Minister Martin Ferguson said the government was committed to keep a controversial plan to reimburse miners for 40 per cent of their losses.
But with opinion polls predicting the Australian Greens gaining the balance of power in the Senate after the next election, the government may have to scrap this.
Greens leader Bob Brown has said that while he supported the resource profits tax in principle, he did not want miners being rebated for their losses.
