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2010-06-29

Swan still swimming in the wrong direction

Comments on Alan Kohler “CEO PULSE: An unfair tax feast”, 29/06/2010, http://www.businessspectator.com.au/bs.nsf/Article/RSPT-mining-tax-rent-tax-Rudd-Gillard-pd20100629-6USUE?OpenDocument&src=sph
The most irony of the ALP leadership change is the promotion of Swan.

He was the most damaged minister of the Rudd ministry, probably as much as Rudd himself.

But he is from the right faction and it wants a senior representation in the leadership.

I think if Gillard is intelligent enough, she should sideline Swan in real terms while he still is apparently the deputy and Treasurer.

She should let Ferguson to do the hard work carrying her instruction, and step into the front when the deal with the mining industry is reached, leaving Swan only at the side of the room or table.

They should not do a separate deal with the CSG and should do a modified PRRT and call it RRT. There should be a uniform tax regime for the mining industry. The modification is the tax rate – it should be a little lower. It would be also possible to slightly increase the lift rate by a percentage point. By these two modifications, all mining can be accommodated.

Of course, as with the introduction of the PRRT, they should not be applied to existing mining production, except when there are further increases in mineral prices from the time the tax is agreed upon. If mineral prices are further rising, then those increases could be taxed.

Exact details can be worked out down the track, but an in-principle can be agreed.

That should be the blueprint for the mining tax front and that is the only practical strategy for her to take.

PS: the following is the first few paragraphs of the Kohler post:

“Australia’s CEOs are hoping Wayne Swan is not really as silly as he looked in Toronto, and that he comes back from the G20 meeting a wiser man than when he left.
As he strutted around Toronto saying: “we’re miles ahead of the game, you know”, other finance ministers would not have been envious, they would have been laughing. Meanwhile his colleagues back home are desperately trying to find a way out of the RSPT mess he left behind.
CEOs surveyed in the monthly Business Spectator Accenture CEO Pulse want Prime Minister Julia Gillard to fix the RSPT fast, and preferably drop the tax entirely – which is remarkable when you consider that the resource super profits tax is financing a cut in the company tax rate.
Most of the CEOs surveyed are not in the mining industry are therefore beneficiaries of the RSPT through the proposed cut in the company tax rate from 30 per cent to 28 per cent. But they’re not happy about that – they are too worried about the impact of the RSPT on Australia’s international reputation for stable and sensible government.”

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