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Government defends mining tax despite zero re -

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Government defends mining tax despite zero revenue
Alexandra Kirk reported this story on Thursday, October 25, 2012 12:10:00

ELEANOR HALL: Despite conceding that it hasn't raised a cent in its first three months of operation, the Treasurer is insisting that the Government's new mining tax will still raise $2 billion this financial year.

The Coalition is using the tax to taunt the Government, saying that only Labor could introduce a tax that raises no money.

The Government is also on the defensive over the failure of the business group it set up to agree on a way to cut the company tax rate.

In Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: The Federal Opposition's claiming vindication for accusing the Government of "deceptively" releasing its budget update, early, on Monday, to avoid revealing the it first mining tax revenue receipts.

JOE HOCKEY: I have never heard of a tax that doesn't raise a dollar.

TONY ABBOTT: Only the Labor Party could introduce a confidence destroying, investment destroying tax and then not raise any money.

ALEXANDRA KIRK: Leader Tony Abbott and shadow treasurer Joe Hockey have leapt on the revelation that not a single dollar was paid to Treasury for the first three months of the new tax.

TONY ABBOTT: I mean this is the extraordinary feature of this monumentally incompetent government that they can have the worst of all possible worlds. They can introduce a new tax, which does massive damage to our reputation overseas, which does massive damage to investor perceptions of Australia and then so botch it that they get no revenue from it. Yet the spending associated with the mining tax continues apace.

ALEXANDRA KIRK: The Government stresses its Minerals Resource Rent Tax is a profits based tax, so it's only paid when mining companies are making profits.

WAYNE SWAN: You can't take one particular quarter and claim that as representative of the whole year.

REPORTER: So you've factored it in?

WAYNE SWAN: Yeah, absolutely.

ALEXANDRA KIRK: So Mr Swan's standing by Treasury's revised forecast of $2 billion worth of mining tax revenue flowing into the Commonwealth's coffers this financial year.

Frontbencher Simon Crean puts it this way.

SIMON CREAN: And let's just say the first three months is hardly the basis for saying that this is not going to raise anything. The first three months we've seen a big drop in commodity prices but I think the other factor about this tax is it was never projected to raise it in the early part. It is later that it raises it. Why won't it raise it in the early part, because these mining companies are making massive investments in infrastructure which is tax deductible. That after all, is the reason Twiggy Forrest, even during the resources boom and the very high prices, was himself payment no tax.

ALEXANDRA KIRK: But Joe Hockey says the Government's making flimsy excuses.

JOE HOCKEY: The mining tax is based on assessment of an annual remittance that is broken down to quarterly payments, so obviously Simon Crean doesn't understand the Government's own tax.

ALEXANDRA KIRK: The Greens are critical too, albeit from a different perspective, urging the Government to come up with a design that will yield extra revenue from mining. Leader Christine Milne's taken aim at the Treasurer for talking big but under delivering.

CHRISTINE MILNE: He is full of Springsteen, he's full of talk about taxing the rich billionaires in order to give to the broader community but in reality, the mining companies have obviously pulled the wool over the Government's eyes or the Government went along with it. Either way, it needs to be fixed.

ALEXANDRA KIRK: The Government is disappointed, through, in the Business Tax Working Group's failure to reach agreement on how to fund a cut to the company tax rate to 30 per cent. The group couldn't agree on which concessions to cut to fund the Government's promised tax cut.

Joe Hockey blames the Government.

JOE HOCKEY: Well, the business community gave its best shot trying to work with others to come up with a better design on business tax and after Monday's announcement, no wonder the business community has no faith at all in the Australian Government and no wonder employers are just closing their purses and wallets and thinking carefully about whether they are actually going to continue with significant investment over the next few months until the election.

ALEXANDRA KIRK: But the mini budget was brought down on Monday and the Business Tax Working Group has been working for months on trying to come up with a way to achieve a corporate tax cut rate so you can't blame the Government for that.

JOE HOCKEY: No but I do because what the Government announced on Monday has never been contemplated in the hundreds of hours of negotiations and discussions between the business community and the Australian Government.

ALEXANDRA KIRK: Wayne Swan's hit back.

WAYNE SWAN: Mr Hockey is behaving very strangely at the moment. I mean he said you can't blame the Government but I do.

ELEANOR HALL: That is the Federal Treasurer Wayne Swan, ending Alexandra Kirk's report.