Monday, 20 June 2011
Questions on Notice
Mining (Question No. 10)
asked the Minister representing the Treasurer, upon notice, on 28 September 2010:
(1) For the 3 year period up to 2020, using the price forecast used in standard treasury modelling, what revenue will be raised from the Minerals Resource Rent Tax, based on price assumptions for coal and iron ore as used in the Treasury modelling for the Carbon Pollution Reduction Scheme.
(2) What is the estimated cost of the company tax reduction during that period.
(3) Is there any risk that the additional net revenue from the Minerals Resource Rent Tax will fall short of the estimated reduction in revenues from company tax; if so, how great is that risk; if not, how safe is that assumption and why.
The Treasurer has provided the following answer to the honourable senator's question:
(1) The net financial impact of the Minerals Resource Rent Tax over the forward estimates period has been published by the Government in the 2011-12 Budget. It is not usual practice for governments to release the medium and long term revenue impacts of individual measures. The estimated net revenue impact of the Minerals Resource Rent Tax over the forward estimates is a revenue gain of $11.1 billion, comprising $3.7 billion in 2012-13, $4.0 billion in 2013-14 and $3.4 billion in 2014-15.
(2) The company tax reduction from 30 per cent to 29 per cent in 2013-14 (abstracting from the impact of transitional timing) is estimated to cost around $2 billion.
(3) Treasury does not produce estimates of the expected revenue from the Minerals Resource Rent Tax beyond the forward estimates period. Acknowledging that these figures have been produced on occasion in the past, the former Secretary of the Treasury, Dr Ken Henry, noted in Senate Estimates on 24 February 2011 that “the figures are of such poor quality, there is so much uncertainty attaching to them, particularly the figures in the out years – that is, beyond the forward estimates period – that they are not figures that should be accorded the significance they have been accorded in public debate.” This is because of considerable uncertainty in such estimates, which are highly sensitive to various factors including exchange rate movements and minerals prices. Company tax revenue collections are also subject to variability arising as a result of similar factors. Given the considerable uncertainty attached to these estimates, figures beyond the forward estimates would be of such low reliability that it would not be appropriate to estimate them. It is therefore not possible to accurately predict the net balance over the longer time period between the additional revenue from the Minerals Resource Rent Tax and the estimated reduction in company tax revenue.