Colin Barnett, Premier of resource-rich Western Australia told CNBC on Friday that the federal government's mining tax is unfair and unconstitutional.
"What is often forgotten and not known throughout Asia is that under the Australian constitution the minerals are owned through the state government, not the central government," said Barnett.
The premier told CNBC that the Minerals Resource Rent Tax was discriminatory as it singles out iron ore and coal and since China is a huge importer of these commodities, it was in fact a tax on China.
"It's seen as quite offensive to China, because that's where the major market is," he said.
The MRRT was introduced last year, and the Senate is expected to pass it next week, after which it will come into effect in July. The tax will be levied on 30 percent of profits from mining iron ore and coal.