Australia’s Minerals Resource Rent Tax compromise is positive news for big miners but it comes at a price for the wider business community.
BDO Director of corporate and international tax Russell Garvey said the MRRT deal struck between the Gillard Government and the big miners (BHP Billiton, Rio Tinto and Xstrata) would help ensure Australia would not be priced out of the international market.
“The previous proposal was far too damaging to the entire sector, and this deal comes closer to satisfying industry principles and the government’s desire for improvements to resources tax arrangements” said Mr Garvey.
However, Mr Garvey said the wider Australian business community would be disappointed at measures that halve the promised cut in the corporate tax, which would affect SMEs as well as big business.
Australian Industry Group Chief Executive Heather Ridout supports the Minerals Resource Rent Tax compromise, but not at the expense of a decrease in the Company Tax Rate.
“The Minerals Resource Rent Tax deal announced today appears to be a reasonable compromise. However, the decision not to proceed with the company tax cut to 28 percent is deeply disappointing while the retention of the proposed superannuation guarantee increase leaves business with a very big bill,” Ms Ridout said today.
Despite halving the cut in Company Tax rates due to the decreased tax revenue coming in from the Minerals Resource Rent Tax, the plan to increase the superannuation rate to 12 percent.
“The decision to proceed with the plan to compel businesses of all sizes to raise their contributions to superannuation on behalf of employees from 9 percent to 12 percent, leaves business with a very big bill – one that will now not be compensated through the improvement to the company tax rate.
“This makes it even more imperative that a systematic trade-off be implemented to offset the superannuation guarantee (SG) increase. This would require Fair Work Australia to discount its minimum wage increases to reflect SG increases and for the Fair Work Act to be amended to require bargaining representatives to take into account SG increases that employers will be required to pay “she finished.