The Australian Treasurer Wayne Swan has been receiving a grilling from the media over the fine detail of the country’s proposed mining tax (MRRT), and the news that the Greens have put the tax in doubt by insisting that they won’t support the associated company tax cut.
The Greens leader Bob Brown says the AUD18bn dollars from the tax cut should be spent instead on social policy. He is unhappy about the fact that resource companies will pay just under AUD40bn dollars over a decade instead of the Henry Tax Review’s original AUD140bn dollar mining tax recommendation. Senator Brown believes that the major mining companies and the big four banks will be the biggest beneficiaries of the proposed corporate tax reduction, and that it could be better spent on such things as help for small business, health and aged care.
The Coalition doesn’t support a mining tax, so the Government will need the Greens to get it through Parliament, and in July the Greens will have the balance of power in the Senate.
When asked about the legislation Mr Swan said that other changes will have to be put in place to legislate for changes to the company tax rate and also the legislation associated with the AUD5,000 instant asset write off. He said that the revenues from the MRRT are linked closely to company tax cuts, to the additional contributions to low-income earners in the superannuation system and spending on infrastructure.
“So some, but not all of that will involve legislation, but it does come as a package and it’s very important because it goes to the core of our response to the patchwork economy and the challenges that arise from Mining Boom Mark II,” he said.
“We absolutely understand the importance of making company tax in this country competitive of attracting international investment to drive the opportunities which will flow from the mining boom. So we’re very much of the view that the balance in the package is right. It’s what Australia needs to maximize the opportunities flowing from the mining boom.”
When asked about the Greens’ opposition to the company tax cut, he said that the Government will be pursuing its objectives very strongly in the Parliament. “As far as I know the Liberal Party policy is still to increase the company tax rate so there will be a very clear choice between the Labor position there and the Liberal position, which is to increase the corporate rate.
“These will be matters for the Parliament but we will pursue strongly the package of reforms which maximize the opportunities flowing into the Australian community from the resource rent tax.
“Never forget this – the number one recommendation of the Henry Review was for a resource rent tax. What flowed from that recommendation was a further recommendation that Australia needed to make its company taxation regime more competitive in a world where there was vigorous competition for global capital and we need that global capital to further drive investment in this country.
“So the two are linked very much in terms of the recommendations from that report and we accept that that central thrust, that’s clearly not accepted by the Greens so there will be a clear divergence of opinion between the Greens and the Government on that question and between the Government and the Liberal Party on the other side which wants to increase company taxation,” he said.
Mr Swan pointed out that he recognized that not every small business in Australia is benefiting from the boom in resources or is located in a community which is benefiting from the boom in resources, and that was why he wanted to give them a very substantial tax cut.
“We want to do something which is economy wide for all of those people that aren’t necessarily in the fastest lane of the economy. That’s why we want to use the revenue from the resource rent tax, to do something for everybody, to spread the prosperity that flows from the investment boom.
“The Greens are not the only actors in the Parliament, either in the House of Representatives or in the Senate when it comes to the passage of this legislation. The Government will pursue its program because it’s right for Australia,” the Treasurer said.
Andrew Robb, Shadow Minister for Finance, has also waded into the debate, saying: “There is speculation that the Government has severely overestimated the mining tax revenue and secondly, they’re looking for every avenue to minimize promises that they’ve made, be forced into removing promises by the Greens on this occasion. You’d have to be cynical about the cooperation that’s going on between Labor and the Greens to minimize the commitments that they’ve made to the budget”.
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