Angelos Damaskos, chief investment officer (CIO) at Sector Investment Managers and manager of the CF Junior Oils Trust said the tax could potentially materially affect the mining industry and its capacity to invest in exploration and development of new projects.
"It is expected to affect mature producers such as BHP Billiton and Rio Tinto as the smaller companies have large capital expenditure items to use as a partial shield. Nevertheless, these only defer the tax due rather than reduce it," he said.
Data from Financial Express showed there are 92 IMA UT and OEIC defined funds with exposure to BHP Billiton and Rio Tinto. Those funds with the largest exposures include the First State Global Resources fund and Baring's Global Resources fund, both fund have their highest sector weightings to Industrials.
Performance of funds over 3-yrs
Source: Financial Express Analytics
Damaskos also pointed out that although the proposed tax is aimed at helping smaller companies it could have the opposite affect.
"Companies that will face the largest increase in taxation will be those with long-life, depreciated and highly profitable mines. Even though it is intended to help smaller companies, it is likely to make the transition to mid-tier producers harder and limit the availability of capital to the sector," he explained.
Evy Hambro, manager of the BlackRock BGF World Mining fund said the tax could negatively impact all the associated support businesses that go alongside the mining sector.
"Another challenge that this tax creates is how mid to small mining companies will finance projects due to the reduced cash flow available to finance project debt. By default, this will necessitate a greater amount of equity to be raised, but, with returns for investors lower, will they be keen to invest?" he questioned.
"A vicious circle could potentially start to emerge and the sector could end up shrinking under the weight of the new tax.
"The impact of the RSPT will be felt not just by employees, local communities and shareholders, but also by customers as they could potentially end up paying for the tax in the higher prices needed to justify the investment in new supply," he added.
However, despite the negativity countries such as Brazil, Canada and Chile, which are rich in resource and have lower taxation could actually stand to benefit if Australia does go ahead with the tax, according to Damaskos.
"Canada has 19.5 per cent, Brazil 25 per cent and Chile 17 per cent tax to name the most important ones. It is likely that investment capital will prefer to focus on projects in those jurisdictions at the expense of Australian properties," he said.
Looking ahead managers believe there is temptation for other countries to follow suit and impose taxes as well.
However, Richard Buxton, head of UK equities at Schroders does not believe the tax will get implemented in its current form.
"We are in year nine to ten of a commodity bull market and this will become more interesting as other countries look to do similar things. I think we will see more of this but not in the form that Australia proposed," he said.
While Damaskos said that increasing tax revenues could prove to be too tempting for some countries.
"We live in an environment of low economic growth, fiscal deficits, large public debt levels and high unemployment. It is, therefore, tempting to politicians to find ways to increase tax revenues that will help in plugging some holes," he explained.
"Australia has significant public debt even though it is in better shape than Britain and the US, not to mention some countries in the Eurozone. Canada, Brazil and Chile, on the other hand, have strong public finances and continue to benefit from historically high commodity prices.
"I think it unlikely these later countries will follow the Australian lead but the temptation is there and who knows whether politicians will use the excuse to tap into the miner's profits," he concluded.
The new tax has been thrown into considerable uncertainty this past week after the ousting by the ruling Australian Labor Party of Kevin Rudd as its leader in favour of Julia Gillard - the country's first female prime minister. She has since moved to cut back on government funded advertising promoting the new tax.