As unlikely as it seems, axing the Minerals Resource Rent Tax tax will save the Coalition a fortune. In fact its the most lucrative of the policies it took to the election.
Treasurer Joe Hockey put a $13 billion price tag on it on Thursday as he unveiled the draft legislation that would abolish the tax. That’s a $13 billion benefit to the government from axing the tax. Axing the mining tax itself will cost the government $3.5 billion in the years to June 2017. But axing what it says are the associated measures will make it more than $17 billion.
Among those measures, whose repeal is included in the MRRT repeal bill, are the Schoolkids Bonus, the Low Income Superannuation Contribution, the Income Support Bonus, a more generous asset write off for small businesses and accelerated depreciation for business vehicles.
All were to funded by either the mining tax or by Labor’s “spreading the benefits of the boom” package. The Coalition’s position is that the boom is receding and the tax will be no more. Everything Labor tied to extra income from mining would go as well.
With one exception. Labor’s staged increase in compulsory super contributions costs the government money because it means a greater proportion of each salary will be lightly taxed...
The Coalition will keep the staged increase but delay it for two years.
Its an exception that will help high income earners more than low income earners, made doubly hurtful because the Coalition is withdrawing the low income super contribution. It says it wants to withdraw it from July 2013, which would make the snatching of the bonus retrospective. What is more likely is that the legislation won’t get through the Senate until after it changes in July 2014 giving low earners another year.
The mining tax (and the measures the Labor said mining would fund) might last another year.
In The Age
. Coalition costings
. 11 out of 10. Coalition costings pass muster, for now