MRRT discriminates against states, Fortescue lawyers tell High Court Geoff Elliott and Chris Merritt take a close look at Andrew Forrest's High Court challenge to the MRRT and the implications for the states. Lawyers for Andrew Forrest's Fortescue Metals have told the High Court the government's mining tax discriminates against the states. LAWYERS for mining magnate Andrew 'Twiggy' Forrest have told the High Court the structure of Julia Gillard's mining tax discriminates against the states and is unconstitutional. David Jackson, QC, acting for Mr Forrest, said the Minerals Resource Rent Tax was discriminatory because the tax was calculated based on the amount of state royalties paid by each company - which differed across the country. He told the full bench of the High Court that a mining company's liability for the tax could be reduced by a number of factors, including investment and infrastructure spending as well as how much was paid in state royalties. "This is a case where the tax is directly calculated by reference to the amount of royalties," he said. If you are a miner in state A which has a royalty rate of three per cent, you pay more MRRT than in another state where it's...say five per cent. Mr Forrest's company Fortescue Metals Group commenced High Court proceedings against the Federal Government in June last year. The Queensland and Western Australian governments are also parties to the case. The MRRT has been an embarrassment for the Prime Minister and Treasurer Wayne Swan because it has only raised $126 million in the first six months, instead of the $2 billion in a year originally estimated. Mr Jackson told the court this morning that parliament had the power under the constitution to make tax law as long as it was not discriminatory against the states. He said the way the MRRT was calculated was discriminatory because of the differences in state mining royalties. The heart of the matter is....does the law discriminate against the states? It's an important case because the question hasn't precisely arisen in the past. The plaintiffs have also argued in written submissions that the MRRT limits the ability of the states to be competitive against other states and raise royalties. In its written submissions, the Commonwealth argues that the mining tax is uniform across all states. The hearing continues this afternoon.