Swan dismisses two of miners' main tax demands

31 May, 2010 12:44 PM
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Federal Treasurer Wayne Swan.
Federal Treasurer Wayne Swan.

WAYNE Swan is all but ruling out two of the key tax demands of the disgruntled mining sector - exempting existing mines from the proposed super profits tax and charging different tax rates on different commodities.

The Treasurer's comments came as debate escalated about the government's $38.5 million advertising blitz for the tax.

The opposition called for an inquiry into the relaxation of government advertising standards and the Greens proposed legislation to prevent it happening again, while the government lashed out at the mining magnate Clive Palmer for campaigning against the tax and donating heavily to the Coalition.

In his first comments justifying why the tax should apply to existing projects, Mr Swan said those arguing for an exemption were really arguing that governments should never change tax rates.

He said there was a good policy reason to include all projects: ''To exclude existing projects would of course create significant distortion of investment, as prospective projects and existing projects would be on an uneven tax playing field.''

The Minerals Council of Australia has argued that the government must be prepared to negotiate on the tax's retrospectivity, and on differentiating between different commodities, which require different levels of investment and return different levels of cash flow and profit.

But in his weekly economic note, released yesterday, Mr Swan argued the tax's own logic meant there was no need to treat commodities on their own terms. ''The fact is that, by design, a [resource super profits tax] already differentiates by commodity,'' he said.

''As a profits-based tax, the RSPT already takes account of the different revenue, cost and profit profiles of different commodities. It also contains very generous treatment of investment.''

The mining tax debate will dominate Parliament this week, and will be punctuated by new analysis from Rio Tinto which it says will show how much tax it actually pays.

The government says miners pay an effective rate of 17 per cent, while the industry has said it is closer to 30.

The chief executive of Rio Tinto, Tom Albanese, said yesterday he thought his company paid closer to 35 per cent plus state royalties.

''I'd say some time early this week we will be providing audited, externally assured numbers as to what our tax payments are to show that we are a fair taxpayer,'' Mr Albanese told ABC1's Inside Business. He repeated his view the proposed tax was his top ''sovereign risk'' concern across the world.

The opposition yesterday called for a Senate inquiry into the government granting its advertising campaign an exemption from scrutiny.

The Greens leader, Bob Brown, wants to restore the Auditor-General's role in making sure government advertising is not party political.

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