The passage of the Minerals Resource Rent Tax (MRRT) Bill through parliament should not be a template for future tax reform, Business Council of Australia Chief Executive Jennifer Westacott said.
“Although a marked improvement on the deeply flawed Resource Super Profits Tax, the tax falls well short of the principles of good tax design the BCA has previously articulated,” Ms Westacott said.
“The tax system should be stable and predictable, and any changes should support investment and enhance Australia’s international competitiveness. Tax changes should also be prospective and not retrospective.
“The MRRT fails to meet good tax design principles and as a result does little to maintain Australia’s standing as a competitive and attractive investment destination.
”The concern is that the cumulative effect of the carbon tax and the MRRT will be to compromise the long-term competitiveness of our resources sector.
“Given Australia’s reliance on these sectors to underpin economic growth, actions taken by governments that risk their competitiveness will only impede our long-term prospects,” she said.
Ms Westacott said that the development of the MRRT has highlighted a number of complex design and transitional issues, which reinforces the need for genuine and comprehensive consultation.
Moreover, arrangements still need to be formulated between the Commonwealth, state and territory governments to ensure that the MRRT is not used as a mechanism to increase royalties on coal and iron ore.
“It would have been better to have looked at this issue in the context of a holistic approach to resource taxation, involving constructive engagement at an early stage with all stakeholders, including the state and territory governments.
“If Australia is to remain competitive, prosperous and productive, the Australian Parliament must be prepared to embark on a 10-year, comprehensive reform of the tax system.
“It’s in all our interests to improve Australia’s tax system so that it can raise sufficient revenue to pay for essential community services in the coming decades. But it is essential that we do this in a way that doesn’t hold back the economy,” she said