The Senate Select Committee on New Taxes is pondering the implications of the Mineral Resource Rent Tax, holding a hearing yesterday in Perth.
Here is a new tax measure that, even diluted for the election, will still raise over $10 billion a year. This is a beautiful tax: it doesn’t distort miners’ behavior, it can’t be passed on to customers, and gives Australia a share in the minerals being dug up.
The submissions are from the usual suspects: economic think tanks, industry associations, unions and a smattering of individuals who seem preoccupied with the constitutionality of mining taxes (sorry, but this tax is quite above board).
The Business Council of Australia wants the burden of tax shifted to consumption. Typical.
The federal government can now cut other taxes, improve services or reduce its debt. Given it wants to keep its gunpowder dry ahead of the bursting of The Great Australian Property Bubble, government is mute on possible uses.
Now, how would I like to spend $10 billion?
How about helping agriculture, tourism, manufacturing and other trade-exposed sectors being hit by the Aussie dollar going through the roof courtesy of the mining boom? Then there are wage earners paying higher interest rates as the RBA tries to manage aggregate demand boosted by mining investment, without wages rise to compensate.
Ooops! I think I have spent the entire $10 billion ‘windfall’.