The government are having to explain their Clayton’s Tax – the tax you have that raises no revenue. It must be some sort of record; a tax that raises zero, as opposed to little, revenue. So what is the spin?
Regional Australia Minister Simon Crean said the tax was never expected to bring in revenue during periods of heavy investment in the sector.
“It is a profits based tax. In other words, it is only paid when a certain profit level is reached,” Mr Crean told the Nine Network.
“The other factor about this tax was that it was never projected to raise it in the early part, it’s later that it raises it. Why won’t it raise it in the early part? Because these mining companies are making massive investments in infrastructure, which (are) tax deductible.
“So arguing that this is a failure based on the first three months is just ludicrous.”
In isolation that isn’t a bad story. But … Today is Thursday, just last Monday (like three days ago) the government released their MYEFO including expected MRRT revenue (pg. 305) …
Net revenue from the MRRT is expected to be $2.0 billion in 2012-13, $2.4 billion in 2013-14, $2.1 billion in 2014-15 and $2.6 billion in 2015-16, which represent the net impact on revenue across several different heads of revenue. These include the offsetting reductions in company tax (through deductibility) and interactions with other taxes.
… and expected business investment (pg. 14).
Recent falls in global commodity prices have led to some scaling back of investment plans in the coal and iron ore sectors. Still, resources investment is expected to reach unprecedented levels, driving new business investment to record highs as a share of GDP over the forecast period.
Simon Crean tells us that the tax isn’t supposed to raise much revenue when investment is high while the MYEFO tells us it will net $9.1 billion over four years despite resources investment being at unprecedented levels.