Mining tax should be returned to the states

Comments on Matthew Franklin and Amanda O'Brien “Gillard to take mining tax to COAG”, 21/12/2010, http://www.theaustralian.com.au/national-affairs/gillard-to-take-mining-tax-to-coag/story-fn59niix-1225974171014

The problem with the MRRT or RSPT is that the federal government tries to grab mining revenue that should belong to the States.

That is where the tension of whether future increases of royalties by the states can be credited to offset the proposed tax.

Imagine that if all the proposed tax proceeds go to the states where the mining occurs, then there would be such contentions on increasing the royalties by the states or not.

In retrospect, it appears that the Henry review had a natural bias towards to benefit the federal government in terms of revenue.

The process of tax reforms proposed by the Henry review, if the mining tax is to be used as an example, will further exacerbate the vertical fiscal imbalance in Australia.

That is not good for a good federation – a well functioning and efficient federation requires clearer responsibilities and revenue powers at each level of government of the federation. But Henry review, so far at least, has not assisted in that direction.