Greens’ big corporation taxes for resources sector to raise $61.6bn: PBO
Proposals to implement a 40 per cent super profits tax on mining and coal projects along with other taxes is estimated to improve the budget balance by around 61.6 billion across the FY2024–25 forward estimates, says the Parliamentary Budget Office.
The Parliamentary Budget Office (PBO) has released its costings for two major tax policy proposals by the Greens Party, including the introduction of a 40 per cent coal and mining tax that would be applied to the super profits of Australian mining projects.
The Greens also want to apply additional taxes to oil and gas projects by changing the way the petroleum resource rent tax (PRRT) is calculated and applying a 10 per cent royalty on offshore projects that are subject to PRRT.
In costings released this week, the PBO said the 40 per cent super profits tax for mining projects would increase the fiscal balance by around $26 billion and the underlying cash balance by around $22.7 billion over the 2024–25 budget forward estimates period.
The PBO noted that the increase in net revenue would be partially offset by an increase in the ATO departmental expenses of around $105 million.
It also noted that the revenue raised from the new tax would be partially offset by a reduction in company tax revenue due to the coal and mining tax being deductible for company tax purposes.
“There is considerable uncertainty associated with this costing as the proposal is extremely sensitive to forecasts of mineral prices,” the PBO said.
“The estimates of CMT revenue are consistent with the forecasts for commodity prices in the 2024–25 budget. The financial implications of the proposal would also be sensitive to any changes in behaviour in response to the new tax, mineral production, capital expenditure, economic conditions and global economic outlook and exchange rates.
“Variations in these factors would significantly affect the revenue raised by the proposal. In practice, a CMT would be a highly variable tax and changes in the revenue collected would be expected to vary more than proportionally with any changes to these parameters.”
The other proposed measures to change the method of calculating PRRT and imposing a 10 per cent royalty on offshore projects are expected to increase the fiscal balance and underlying cash balance by around $35.6 billion and $33 billion respectively, over the 2024–25 budget forward estimates period.
“This impact reflects an increase in PRRT and royalty revenue, and a decrease in company tax revenue,” the PBO said.
Greens leader Adam Bandt also announced plans to introduce so-called Robin Hood tax reforms last week which would levy a 40 per cent tax on excessive corporate profits after the first $100 million in turnover.
The tax is projected to claw back $296 billion over 10 years, according to modelling from the PBO.
Bandt said the policy would tax excessive profits but “will not take a cent from the pockets of Australians” who relied on returns from investments.
Business Council chief executive Bran Black slammed the taxes and believes consumers, workers and super account holders would “pay the price” despite the Greens’ insistence they would benefit.
“There is no such thing as a free lunch and this policy would lead to a mix of fewer jobs, lower returns for shareholders and higher prices for consumers,” he said.
Hiking taxes for big business would “make Australia one of the worst places in the world to run a business and Australians will pay the price with fewer jobs and less investment … it would make our company tax rate the highest in the OECD, with Colombia, Latvia and Costa Rica more attractive places to invest, hire, and pay tax”.
“We all want to tackle the cost of living, but targeting businesses with huge taxes isn’t the way to do it. We need policies that help create jobs, keep prices down, and ensure our communities continue to flourish, without putting unnecessary strain on our economy.”
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