TREASURY TALLY
What the Coalition will cost business
Paid parental leave levy: $3.2 billion per year
Scrapping of instant write off and associated provisions: $1.07 billion per year
Scrapping loss carry back provision: $300 million per year
Annual total: $4.57 billion
Treasury analysis
The Commonwealth Treasury believes the Coalition’s tax policies will cost Australian businesses an extraordinary $4.57 billion in their first full year of operation.
Prepared as Treasury attempts to come to grips with a suite of Coalition policies yet to be announced, the analysis includes only those to which it has publicly committed. Excluded are policies with a negative but uncertain impact on business such as winding back the increase in the employee tax free threshold from $6,000 to $18,200.
The three policies identified by Treasury are the Coalition’s commitment to impose a 1.5 per cent tax levy on big firms to fund paid parental leave, its decision to axe instant asset write off and other tax breaks for small business funded from the carbon tax, and its decision to axe the ability for businesses to “carry back” losses and obtain refunds for tax already paid funded from the mining tax.
The analysis excludes the benefit to some businesses from axing the carbon and mining taxes.
Treasury finds businesses would lose $4.5 billion in the first full year the Coalition’s three commitments were operational, accumulating to $17.2 billion over four years. Its calculations suggest manufacturers would pay an extra $1.34 billion per year, retailers an extra $930 million, and the construction sector an extra $860 million per year.
Although business as a whole would benefit from the Coalition’s policies because of the removal of the $6.6 billion per year carbon tax and the $2 billion per year mining tax, the analysis suggests that outside of the few big companies paying those taxes the rest of Australian businesses would suffer.
Treasury’s responsibility for costing Opposition policies in the leadup to elections has been transferred to the new Parliamentary Budget Office, but it still maintains a watching brief on behalf of the government. During the 2010 campaign it found errors and differences of opinion over Coalition costings amounting to $11 billion...
Finance Minister Penny Wong told the ABC on Sunday the Coalition was being irresponsible by attacking government moves to keep the budget in surplus while not detailing how it would fund its own promises to axe the carbon tax and the mining tax.
“I'm not sure it's very responsible to talk about the importance of bringing a budget to surplus and the importance of fiscal discipline but not telling people what your cuts are,” she said. “And I'm not sure it's responsible to talk about the ending of the age of entitlement but then oppose the tightening of benefits such as the Baby Bonus, and Family Tax Benefits.”
Coalition finance spokesman Andrew Robb attacked Senator Wong for refusing to guarantee the budget would be in surplus.
“Wayne Swan alone has declared on at least one hundred and fifty occasions the government will deliver a surplus in 2012-13 come hell or high water,” he said. “If Labor walks away from this commitment it would sit alongside Julia Gillard’s infamous promise there would be no carbon tax.”
In budget analysis to be released Monday Deloitte Access Economics says sliding mining revenues make the forecast surplus unlikely. It expects a deficit of $4.2 billion this financial year, followed by a deficit of $5.1 billion in 2013-14.
“China has slowed and that hurts the budget,” Access says. “While we cheer the genuinely tough decisions in the budget update - notably the cut to the baby bonus and to indexation of subsidies to private health insurance - the budget is still in search of a surplus.”
In today's Sydney Morning Herald and Age
JOE HOCKEY MONDAY: TREASURY GOT IT WRONG, SOMEHOW
Do you dispute the figures?
JOE HOCKEY:
Yes. Absolutely. They are fundamentally flawed on a number of basis, including the fact that some of the assumptions are wrong, fundamentally wrong. Treasury never rang us about it and certainly the journalist, Peter Martin, never rang us about it. You would think it was 101 in journalism that when you are making allegations about someone or something that someone has done that you give them a courtesy phone call. Quite frankly, it is becoming a bit tiresome when these sorts of documents are published by newspapers or others as if they are fact when in fact when they are not – they are factually incorrectly, they are grossly inaccurate and the journo never bothered giving us a phone call.
JOURNALIST:
What assumptions are wrong?
JOE HOCKEY:
A range of assumptions. You will see why they are so wrong when you look at our policies before the next election.
JOURNALIST:
Can you tell us specifically where it is wrong? You said a range of errors.
JOE HOCKEY:
There are a range of errors. You will see. They could have rung us and asked us.
JOURNALIST:
But you can’t tell us which areas?
JOE HOCKEY:
No. I am not going to waste people’s time. For a start, some of the policy assumptions; that we are not going to pass on the benefits of abolition of the carbon and mining tax, weren’t included in the numbers. Of course that is a benefit to business! We have said repeatedly, the carbon tax and the mining tax are going to go. Now the mining tax is hardly raising a dollar but we have also said there are a number of spending initiatives associated with those packages that are going as well. So that wasn’t taken into account. It goes on and on and on. Pretty typical really.
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