Tax uncertainty returns with a vengeance

GREENS Leader Bob Brown has stated the party will not block the Minerals Resource Rent Tax proposal “if” it gets to Parliament, while Western Australian Premier Colin Barnett is confident the Greens will lobby to broaden the mining tax.
Tax uncertainty returns with a vengeance Tax uncertainty returns with a vengeance Tax uncertainty returns with a vengeance Tax uncertainty returns with a vengeance Tax uncertainty returns with a vengeance

Australian Greens Leader Bob Brown

Blair Price

During his television interview on Sky News, Brown labelled the MRRT as the “second-best” option.

The leader was always supportive of the original resources super-profits tax proposal which would have raked in revenue of about $24 billion over two years, according to revised Treasury estimates.

In the meantime, there are question marks over whether the MRRT will bleed anywhere near the intended $10.5 billion of tax revenue from the coal and iron ore sectors within its first two years.

Resources intelligence company Intierra expects the MRRT to only generate $2.5 billion, while Mine Life senior resources analyst Gavin Wendt forecast a $2-3 billion tax take.

As the only Liberal party premier in the country, Barnett has no reason to keep quiet about his fears.

He told Fairfax Radio that Treasurer Wayne Swan had made a “colossal mess” of the MRRT and had let down the former prime minister, Kevin Rudd.

Swan remains a key architect of the MRRT and he is already at odds with independents Tony Windsor and Rob Oakeshott who want this mining tax discussed at their orchestrated summit in June 2011 which will further consider the Henry tax review reforms.

Yesterday Swan ruled out a discussion of the MRRT at the tax summit, with many commentators suggesting that cracks are already starting to form in the new government.

Barnett expects the Greens would push for a mining tax to cover other minerals besides coal and iron ore, especially uranium, a point made by Wendt over the past few months.

In a public forum organised by the Australian Agricultural and Resource Economics Society, University of Wollongong Professor Henry Ergas said the MRRT would undermine coal and iron ore exploration, distort investment and promote inefficiency according to the ABC.

He reportedly said the tax needed to go back to the drawing board, and other academics also called for a return to the Henry tax review recommendations.

If the MRRT is held back until the outcome of a tax summit next year, the coal industry will get more breathing space.

The shaky two-seat margin held by the minority Gillard government might also come under pressure before a mining tax can be implemented, with Wendt predicting this government will last about 18 months.