“GST and mining tax too low, says OECD” |
| GST and mining tax too low, says OECD Posted: 14 Nov 2010 12:25 PM PST AUSTRALIA'S mining tax is too low, its GST should be increased and extended to food, and its approach to building the National Broadband Network conflicts with ''multiple'' international studies. While it praises Australia's economic management during the financial crisis, a report card from the Organisation for Economic Co-operation and Development is scathing about the Gillard government's pet programs and raises the prospect of it frittering away the proceeds of the mining boom. The OECD also warns against restricting immigration, says the unemployment benefit is too low and warns we need to start an emissions trading scheme ''sooner rather than later''. The views will be widely assumed to be those of the Australian Treasury and mirror and extend those in its incoming government brief released under freedom of information laws. The Treasury has an officer permanently stationed with the OECD in France and extensively briefed OECD officials when they visited Australia. While fully supporting the idea of the minerals resource rent tax, the report says the compromise announced by Julia Gillard ahead of the election set the bar so low that ''taxation of profits of mining companies is likely to remain much lower than before the mining boom''. By limiting the new tax only to two commodities - coal and iron ore - the new regime will distort the incentives facing other resource projects regardless of their merits. Particularly problematic is Australia's plan to spend all the expected revenue from the tax. Should resource prices fall faster than expected, the budget will be exposed. The OECD suggests creating a reserve fund along the lines of those in Chile and Norway to warehouse the mining tax windfall. The OECD repeats many of criticisms of Australia's tax system made in the Henry Review, but says what the review could not because of its terms of reference - that Australia's rate of GST is ''low by international standards'' and that it could be extended by removing exemptions including childcare, health services and fresh food. While supporting the planned NBN as having the ''potential to significantly improve internet services within a relatively short time frame'' the report is damning of the means by which it will be set up, saying they are designed to ''eliminate competition'' with the existing Foxtel cables and Telstra wires. ''This implies a de facto restoration of a public monopoly over the supply of wholesale internet services,'' it says. ''Multiple empirical studies have stressed the value of competition between technological platforms for the dissemination of broadband services.'' It urges the government to take ''a prudent approach'' rather than pursue a ''picking-the-winner strategy'' that destroys competing platforms: ''To develop fibre optic networks more gradually … would also allow a better assessment of the new network's costs and potential benefits and the potential positive externalities.'' The OECD also stressed the importance of maintaining ''an open, demand-driven immigration policy'' to help meet skill shortages and said Australia's unemployment benefit was at risk of becoming inadequate given ''additional attention given to disadvantaged groups''. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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