Govt 'may refine planned super tax'

Federal Finance Minister Lindsay Tanner says the government may refine how the
proposed resources super profit tax (RSPT) is applied but ruled out any change to
the 40 per cent rate.
"I think the area where there's inevitably going to be refinement is on the detail
of the precise application of the tax particularly on the transitional
arrangements," Mr Tanner said on Friday.
He also said there would be no change to the bond rate used to calculate taxable
profits under the Petroleum Resource Rent Tax (PRRT) for offshore oil and gas
projects.
"The basic proposition that we put forward is going to prevail," Mr Tanner said at
an Ord Minnett luncheon in Melbourne.
"We going to keep pushing forward, but there is scope for examining the fine print
because ... there really is some complexity that needs to be talked through. "
The government has come under fire from the opposition and mining companies over its
proposed RSPT.
Mr Tanner said the government was working through the precise design of the tax with
mining companies.
Mr Tanner rejected the notion that the RSPT represented a change to the way
successful businesses were taxed.
"This is the only sector (resources) where the core activity consists of the
community handing over a set of its assets and saying ... do what you will with them
- not invest this for us and return them like we do with banking," he said.
"So ultimately what this is a pricing mechanism by which the Australian community
engages with those who are in the business of exploiting those resources and says
... you can exploit these resources but here is the price you will have to pay to do
so."
Mr Tanner said the proceeds from the tax would not go to prop up projected budget
surpluses or social spending.
"They are financing a package of tax reductions for business and wealth creation
initiatives, savings initiatives across the board."
This includes a new rebate for mining exploration costs, he said.
Economic modelling for federal Treasury by KPMG Econtech showed the proposed RSPT
stands to add another 0.7 per cent to gross domestic product over the long term by
increasing household consumption, wages and investment levels.
KPMG Econtech principal Chris Murphy on Friday said the RSPT would replace highly
inefficient mining royalties with a highly efficient resources rent tax.
"For every $1 of income transferred to the government through mining royalties
there's a further loss to the economy of 70 cents from the disincentive effects for
mining production and investment," he said.
By contrast, the current PRRT has no adverse impact to the economy because for every
$1 its transfers to the government there is no cost, he said.
Mr Murphy said that on KPMG Econtech's projections, mining industry output would
grow solidly over the next two to three years.



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