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The reviled Mining Tax, gone at a price we can live with

walking-thong

No matter how often you watch this Gif you will never get beyond its promise to the fulfilment that you desire, which sums up the ill-conceived and now abolished MRRT

The mining tax has been abolished after a deal with the Palmer United party (PUP) in which the government delayed the abolition of the schoolkids bonus and other savings and deferred already-legislated increases to workers’ compulsory superannuation for seven years.

The prime minister was jubilant after the shock deal was revealed, claiming it rendered the Labor party irrelevant and proved the government – approaching the first anniversary of its election – was “getting on with the job.”

After secret negotiations with PUP, the government revealed a deal with the crossbench senators to finally abolish the mining tax – as it had so often promised – if it retained three programs until after the next election, instead of abolishing them straight away.

In changes that will cost the budget bottom line $6.5bn over the next four years but leave it no worse off in the long term, the government has agreed to keep the schoolkids bonus, the low income superannuation contribution and the income support bonus until 2016 or 2017.

But it will also freeze the amount employers are compelled to put into all workers superannuation accounts. It is currently legislated to increase to 10% in 2015-16 and then by 0.5% each year to reach 12% in 2019-20. After this deal goes through it will be frozen at 9.5% and won’t reach 10% until 2021, rising by 0.5% a year after that.

Source

Well by my reckoning that is another victory for the Coalition government in their campaign to undo the follies of Labor, which means that we will no longer have a tax that costs more to administer than it collects which  makes us a laughing stock to the world. Further the suspension of increases in superannuation will be greeted with great joy but those in our economy who provide the employment, it will mean that the cost of hiring someone will be less over time which should help business to employ more people.  Personally as I have two children in school the continuation of the school kids bonus will come in handy but I very much doubt that it has ever been a game changer to parents in this age of voter cynicism.  As Tony Abbott said yesterday in the Parliament this is not everything the government wanted but it will do.

What this means is that the government has actually achieved the three planks of its election campaign, the Carbon Tax has gone, the Mining Tax has gone and the Boats have been stopped, more importantly though this demonstrates that for all of his bluff and bluster in the media Palmer can be dealt with and the government can bring about the reforms that it was elected to do.

Cheers Comrades

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7 Comments

  1. Ray Dixon says:

    Why would anyone apart from the likes of Gina Rinehart and her fellow filthy rich miners “celebrate” the repeal of the Mining Tax?

    Of course it was about to bring in much more (why else do you think they wanted it repealed, Iain?) because they could only go on for so long deferring and/or shifting mining super profits in order to avoid paying it, which is exactly what the miners have done.

    And of course Clive Palmer was always going to agree to it – he’s a miner himself for Gawd’s sake!

    And why would other businesses be pleased? – this has cost them a legislated 1.5% tax reduction.

    So much for responsible Government and addressing the long term welfare concerns – by freezing super contributions at 9.5% out to 2021 that means more people will need the old age pension on retirement than they otherwise would.

    Iain – this is a bloody joke.

  2. Iain Hall says:

    Ray
    the mining tax was like Labor’s terminally ill dog it just had to be put out of its misery, It was an embarrassment to any Labor voter and despite your claims that it would have collected money eventually I don’t believe it ever would have done so.

    Further more it was a blatant money grab at the expense of the States who are the level of government who traditional collected taxation on mining in the form or royalties.

    Like so many things created by your beloved Rudd it was horribly flawed from the very start, then it was hastily thrown together and worse yet money was committed to expenditure on the expectations of this tax making a Motza which makes the Tax a double failure.
    As for the changes to Superannuation, well I think that the whole concept of that is flawed anyway because its predicated upon a notion of an eternally growing share market and economy which is far from being certain and even if it was the small difference is not going to increase the number of future retirees apply for the aged pension as you claim.

  3. Ray Dixon says:

    Iain,

    First of all the Mining Tax we eventually got was Gillard’s watered down version not Rudd’s original proposal, which saw a massive miner-led advertising campaign (a propaganda campaign) against it. That saw Rudd’s popularity dip and gave rise to Gillard knifing him, don’t you remember?

    Gillard then allowed the miners themselves to put a different MT together which she stupidly accepted, just to get them off the ALP’s back going in to the 2010 election. It allowed them to ‘shield’ profits for several years and that’s why it hasn’t yet started to work. They’re a cunning lot those miners. Anyway, it obviously did have an eventual ‘kick in’ date, why else do you think it’s now been repealed?

    As for the States, they would still get their royalties as a deduction against the tax – that was part of the deal – so no, it wasn’t a ‘money grab from the States’.

    And Abbott has been forced to keep many of the things it was supposed to fund like the school kid bonuses so how do you think that will impact the bottom line?

    This is the bloke who said he would reduce company taxes, well he’s just thrown out the legislated 1.5% cut to company tax rates that was part of the deal too.

    As for super, of course it will meam more people on the pension. You’re overlooking the fact that a large portion of people still working use their own self managed funds and don’t pay fees, but now they’ll only be able to put in 9.5% per year from their wages for the next 7 years, instead of 12%. That means many will not be over ‘threshold’ in their super fund assets come retirement and will get at least a part pension.

  4. Seza says:

    You are talking rubbish as usual, Ray. The maximum contribution for this FY is $30,000 not 9.5 % as that is the employer’s mandatory contribution. This means the dreaded millionaires will be the only ones being limited ! Acquaint yourself with some facts http://www.agsfinancialgroup.com.au/sites/default/files/files/New%20Super%20Thresholds%20Jul%202014(1).pdf rather than anti-Abbot rhetoric.

  5. Ray Dixon says:

    No, it’s not “rubbish”. Most people cannot afford to contribute $30,000 p.a. to their super – that’s about 50% of the average wage. People who can afford to do that are never going to need a pension. However, for those on average – just above average wages the 9.5% will not be enough to make them self-funded on retirement.

  6. Seza says:

    So where is the extra percentage going to come from? A magic pudding? It was always going to be taken from the total package, resulting in lower take home pay. It is better to take the extra off your mortgage, and then salary sacrifice at concessional tax rates when you can afford it.

  7. Ray Dixon says:

    The “extra” was to come in incremental 0.5% increases, half from the employee, half from the employer. The employer’s 1.5% contribution would have been more than offset by the immediate reduction in company tax.

    You have your opinion on whether it’s better to save or spend, but I reckon most socially responsible people would want to provide for their own retirement rather than be a burden on taxpayers.

    Btw, ‘salary sacrificing’ and other salary packaging schemes are not generally available to the great masses.

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