Ken Henry Tax Reform

[Bushman]

Meanwhile, Rio Tinto managing director Australia David Peever said the miner was concerned at the "apparently arbitrary way" in which the new tax had been set at 40 per cent.

This is a 'shoot first, ask questions later' government. They rush out policy and then watch the damage unfold. ETS, insulation, BER, relaxation of FIRB rules.

The hope is that this is also a 'backflip' government as Rudd is the most reactive and paranoid leader Australia has ever witnessed IMO. So there is hope yet.

The Coalition is murmuring about blocking the budget in the Senate. Lol! They would be itching to have a crack at tweedle dee and tweedle dum at the moment.

 

[SmellyTerror]

Henry: what a sick joke
Ian Huntley

...
My personal view is that Tony Abbott, foot in mouth and all, looks better each day.

Love to see a list from the opposition saying which Henry recommendations they intend to implement. Shouldn't be hard, surely...

Australia has become gutless, and we get the gutless politics we deserve.

 

[drsmith]

"Taxing 40 per cent of profits over the long-term bond rate, together with corporation tax, would make the Australian minerals sector the highest taxed in the world, seriously eroding competitiveness," Mr Peever said.

If Tony Abbott has even half a brain, Malcolm Turnbull's first job will be to read the detail of the Henry Review.

The Coalition should also reach out to resource business leaders with the aim of reaching some sort of agreement about the rate and threshold for this tax (such that it does not erode international competitiveness) before the ALP do.

He has a Coalition ally in the WA government so he can potentially use this to negotiate a more efficient underlying structure than what the government has put forward.

 

[Whiskers]

BHP is 40% foreign owned and Rio Tinto is 70% give or take a point or two.

They have contributed the most to the Govt coffers. Why tax them out of being competitive?

Yes they have contributed significantly to the gov coffers, but I recall someone quoteing figures that these company profits (much going overseas) have increased exponentially more over recent years than the Aus tax take.

I'd suggest past and arguably current corruption allegations in WA and now Qld where the states collect the mineral royalties and big political donations from the big miners for political favors re mineral leases and developments, that they have left their very fat pork bellies very exposed for someone like Rudd to corner them for a feast of his own.

Not justifying one way or other, but they have made themselves a very conspicious increased tax target.

Taking the devils advocate position, maybe they'll spend more on exploration and development now to develop more projects as opposed to 'cherry picking' the most cost effective prospects they want to develop and useing their monolopy to just sit on many others until they get a sale price they demand or eventually relinquish, forcing big delays or preventing smaller and even private operators getting in on the act.

 

[sammy84]

Factored in Sammy? Miners are getting spanked in early trade. See BRM and other I/o hopefuls...

Yeah I was completely wrong there. I have taken today as a buying opportunity however as there seems to have been overreactions all over the blace e.g BRM

 

[Calliope]

Spineless Rudd has chickened out on Tax Reform.

 

[trainspotter]

Yes they have contributed significantly to the gov coffers, but I recall someone quoteing figures that these company profits (much going overseas) have increased exponentially more over recent years than the Aus tax take.

I'd suggest past and arguably current corruption allegations in WA and now Qld where the states collect the mineral royalties and big political donations from the big miners for political favors re mineral leases and developments, that they have left their very fat pork bellies very exposed for someone like Rudd to corner them for a feast of his own.

Not justifying one way or other, but they have made themselves a very conspicious increased tax target.

Taking the devils advocate position, maybe they'll spend more on exploration and development now to develop more projects as opposed to 'cherry picking' the most cost effective prospects they want to develop and useing their monolopy to just sit on many others until they get a sale price they demand or eventually relinquish, forcing big delays or preventing smaller and even private operators getting in on the act.

Tax rate has remained equivalent to the rise in resource income:- On Saturday, for example, Swan argued: "There are some figures that are worth bearing in mind when it comes to mining taxes. "At the beginning of the 2000s, or around that date, something like one in three dollars in mining profit was returned to the Australian people. Now it's more like one in seven."

Now Swan knows only too well that statement is wildly misleading. He was actually talking about the states' royalties, not the total tax take.

There is no question that the states' royalty payments have not extracted revenue from the miners at the same rate at which profits have been increasing. That is what happens when you have ad valorem royalties which rise and fall on tonnes actually shipped (though in some cases, like coal in Queensland, on prices received as well).

But, according to Swan's own numbers, the industry's total tax contribution (which was $21bn in 2009), represented something near 28 per cent of gross profit generated (through royalty and income tax contributions). And gross profit is a distorting figure to use in this context anyway, given that it does not reflect outgoings like interest payments and depreciation along with income tax.

The federal government believes the Australian mining industry has somehow short-changed taxpayers out of $35bn over the last five years of the boom. The paper notes that the $35bn figure comes from what the government says would have been the share of industry profits through royalties and other charges if they had remained at the average for the first half of the decade, and not fallen from about 40 per cent to 12 per cent in the past five years.

This is a ludicrous position.

The biggest taxpayer among the Australian miners is BHP Billiton. It claims the RSP tax would increase the tax take from its Australian profits from around 43 per cent to 57 per cent by 2013. Last year BHP Billiton paid $6.3bn in Australian tax, some $3bn in company tax, $1.9bn in state royalties and $1.1bn in petroleum resources rent tax.

The company made a net profit of $6.5bn.

http://www.theaustralian.com.au/bus...a-curb-on-growth/story-e6frg9if-1225861303119

What alleged corruption in WA and QLD in the mining industry are you arguably referring to Whiskers? The state mineral royalties will not be relinquished to the Feds is my understanding of the situation.

So on this theory because they are profitable we should tax the hell out of them and watch then disappear to another country (the Jansen potash project in Canada, for example).

 

[Whiskers]

I'd suggest past and arguably current corruption allegations in WA and now Qld where the states collect the mineral royalties and big political donations from the big miners for political favors re mineral leases and developments, that they have left their very fat pork bellies very exposed for someone like Rudd to corner them for a feast of his own.

To eloborate a bit, maybe the states have helped bring this 'windfall' or super' tax on, what with WA holding out on the health agreement citing their wealth of mineral revenue and unequal royalty systems across the states and corrupt or at least political donations arguably affecting competition for projects.

There is also a little matter of mining royalties that are lost to the state, ie paid to other parties due to where that land was alienated in fee simple by the Crown in the early 1900's.

I believe Qld for example looses about 5% of it's royalties to third parties. Curious to know what the number is in other states. In Qld that's abt $b11 last decade in royalties and $500m royalties lost to other parties.

A cynical or maybe pragmatic view might be an attempt by the fed gov to take the mineral industry by the proverbial b@!!s to squeeze some sort of standardised royalty system, even a national takeover there too.

 

[Calliope]

Four out of 138 of Henry's recommendations taken up and they call it tax reform

Even the Fairfax papers have rubbished it;

If history is any guide, pretty much all the nasty changes proposed in the Henry tax review will be implemented.

We'll end up with a congestion tax on cars, much higher tax on wine, land tax on the family home, higher tax on capital gains, cutbacks in negative gearing, a tax on bequests and annual increases in petrol tax.

But it will take up to 25 years to happen. And few of the nasties will be taken up by the government that originally received the report.

That's what happened to the Asprey tax review of 1975, which recommended a host of things the Whitlam government wouldn't touch with a barge pole: a tax on capital gains, taxes on fringe benefits and entertainment expenses, something weird called dividend imputation, and a value-added tax (which John Howard delivered in 2000, exactly 25 years later).

Ken Henry's objective was to lay out another blueprint for long-term tax reform. So though Kevin Rudd has sworn not to touch most of Henry's nasties, don't imagine you've heard the last of them.

Rudd has sorted Henry's many recommendations into three boxes labelled Yes now, Maybe later and No never.

In the Yes-now box are all the nice ideas Rudd hopes will win him votes at the election this year, including a great big new tax on mining companies and cuts in company tax, particularly for small business, and bigger superannuation concessions for low-income earners.

http://www.smh.com.au/opinion/in-time-we-will-get-the-nasties--but-not-just-yet-20100503-u1wo.html

And to add icing to the cake, Rudd added the superannuation levy increase to 12%, which wasn't even in the Henry recommendations.

 

[noco]

Your 'chickened out' comment seems to suggest you think Rudd should have adopted these!?

Clarify please, do you think Rudd should adopt these!?

Rudd instructs Henry to research tax reform, it takes 18 months and $10million to compile. Rudd selects 3 out of 136 Henry reccomendations. Rudd cherry picked the sweetners to vote catch before the election, purely political without consideration as to whether it benifits Australia.

My point in question is not whether I believe the "chicken outs" should be adopted, but you tell me why Rudd did not adopt the whole package as suggested by Henry and why did Rudd increase the super from 9% to 12% when it was not one of Henry's reccomendations.

If Rudd has no confidence in the Treasurer Secretary then he should sack him, or alternatively if I were Henry, I would tell Rudd what he can do with his job.

Whiskers, I hope you have read Ian Huntley's comments posted by Julia. It makes a lot of sense.

 

[drsmith]

The Henry Review set the resources rent tax at 40% on the basis of a corporate rate of 25% giving a total take of 55%. The government is therefore cheating a little with a RRT of 40% on top of corporate tax of 28-30%.

On what basis has the Henry Review suggested a total tax take of 55% from resource company profits ?

 

[noco]

Yes they have contributed significantly to the gov coffers, but I recall someone quoteing figures that these company profits (much going overseas) have increased exponentially more over recent years than the Aus tax take.

Ok Whiskers, lets have a link like you tell everyone else to do. No hearsay stuff please!!!!!!

 

[Whiskers]

My point in question is not whether I believe the "chicken outs" should be adopted, but you tell me why Rudd did not adopt the whole package as suggested by Henry

What! You name one politicial leader who has fully adopted any report handed to them, let alone by a public servant. That would be a very short list if a list at all. I don't know if you have ever been in a position to delegate someone to research and report on something, but I certainly don't adopt as a matter of course everything that someone suggests in a report.

In this case Henry makes his recomendations from his economist perspective in the public service. That's not necessairly the same as what the voter wants... hence the political effect.

So what are you cranky about... do you wish Rudd had adopted all those other nasties too?

and why did Rudd increase the super from 9% to 12% when it was not one of Henry's reccomendations.

Since when has any gov had to have a report recomendation before they can do something! Besides, this one is surely not a surprise to you since it's been mentioned often enough over the years that super contrib's will have to increase to help pay for the retirement of an ageing population.

If Rudd has no confidence in the Treasurer Secretary then he should sack him, or alternatively if I were Henry, I would tell Rudd what he can do with his job.

I expect you would. Quick to launch mouth into gear before engaging brain! :

I expect Henry is realistically not expecting his recomendations to be fully adopted, (that would be a hell of a precedent) is a bit more articulate and diplomatic than you and not least of all, values his job.

I don't read Huntly. He's just another Journo, analyst trying to flog a product.

Ok Whiskers, lets have a link like you tell everyone else to do. No hearsay stuff please!!!!!!

Hearsay! You dissapoint me noco... such an ardent political critic like you would surely have remembered t'was part of the gov speech last Sunday. Trainspotter also referred to it a few posts earlier.

 

[JTLP]

Yeah I was completely wrong there. I have taken today as a buying opportunity however as there seems to have been overreactions all over the blace e.g BRM

Sorry if this sounded blunt! Was just pointing out that I don't think it was really factored in. Market was not a nice place for miner's...that's for sure.

IN OTHER NEWS

I heard Rudd on radio this morning. Ergh. Dropped working families about 20 times; tried to make it seem that Australia was headed in the right direction; craftily evaded questions and turned them in his favour. Sigh.

Sadly Liberal won't be back any time soon...all they've got is a potato gun to shoot down Labor.

 

[Whiskers]

Four out of 138 of Henry's recommendations taken up and they call it tax reform

It's early days yet and really if you didn't expect the relative goodies before the election and the gut wrenchers after, then you're pretty naive.

But the bottom line is... be carefull what you wish for... you might get it (more of the Henry recomendations... and there are some shockers there yet)!

 

[GumbyLearner]

Did the Henry Tax Review recommend lifting the tax free threshold to $25,000?

That's something I would definitely vote for. But I doubt the Labor Government would ever be that generous to those on lower wages. Those on lower wages earn too much and need to be governed for their own good.

 

[Calliope]

It's early days yet and really if you didn't expect the relative goodies before the election and the gut wrenchers after, then you're pretty naive.
But the bottom line is... be carefull what you wish for... you might get it (more of the Henry recomendations... and there are some shockers there yet)

I made no mention of expectations or wishes...merely a comment. Read the link.

 

[Whiskers]

Did the Henry Tax Review recommend lifting the tax free threshold to $25,000?

That's something I would definitely vote for. But I doubt the Labor Government would ever be that generous to those on lower wages. Those on lower wages earn too much and need to be governed for their own good.

Yeah, me too.

I'm thinking tax reform is headed in that direction, probably not all at once though, if for no other reason than the cost to employers and the gov of processing and collecting many of the smaller tax returns is getting more than they're worth. Efficiency and effictiveness is probably heading toward dictating that the complex burden on business and the bureaucracy to process personal income tax is counter productive in many cases.

I made no mention of expectations or wishes...merely a comment. Read the link.

Ok, so that was another useless sarcastic comment, since it's obvious these things (tax reform) don't fully play out in a day or two, but months and years. It's probably smart to drip feed changes otherwise if they all came out at once many might just throw it and their business into the too hard basket.

 

[GumbyLearner]

Yeah, me too.

I'm thinking tax reform is headed in that direction, probably not all at once though, if for no other reason than the cost to employers and the gov of processing and collecting many of the smaller tax returns is getting more than they're worth. Efficiency and effictiveness is probably heading toward dictating that the complex burden on business and the bureaucracy to process personal income tax is counter productive in many cases.

That's bull. Who will pay for the enormously unnecessary bureaucracy for years to come? Those who earn between $30,000-80,000 a year. The majority of Australians that's who? . I personally would rather a tax cut than pay more super to the "faultless" financial planning industry especially after their flawless 10/10 performances during the financial crisis. ROFL It will all be chewed up by inflation and cost of living increases anyway. That's why the Henry Tax Review effectively does nothing for Aussies on average wages. Its a furphy, plain and simple.

Unfortunately Krudd's pro-bank, not pro-battler.

http://www.abc.net.au/news/stories/2010/05/02/2888096.htm?site=thedrum

Tax reform blunted by hollow men tactics

The hollow men have got to this. The Government is introducing significant changes but, in key areas, it has squibbed it, ignoring or ruling out reforms recommended by its tax review panel in favour of the politically-saleable.

The Government has run a mile from changes that would make the tax system both fairer and more efficient - ensuring all Australians are taxed on the basis of what they earn and the tax rorts and tax havens for the well-to-do are shut down.

 

[Calliope]

Ok, so that was another useless sarcastic comment, since it's obvious these things (tax reform) don't fully play out in a day or two, but months and years. It's probably smart to drip feed changes otherwise if they all came out at once many might just throw it and their business into the too hard basket.

I'm sorry but I really don't want to get into a slanging match with you, having been the target of your gutter language on another thread. So you may as well stop trying to stalk me.