Tax review (Henry) discussion articles etc.

[ozbob]

Due for release 2nd May 2010.

Australia's Future Tax System

[ozbob]

From the Brisbanetimes click here!

RACQ may back pay-as-you-drive trade-off

RACQ may back pay-as-you-drive trade-off
TONY MOORE
May 1, 2010 - 3:00AM

The RACQ will cautiously back a "per kilometre" road pricing scheme if it is recommended by the federal government tomorrow, but only if motorists receive tax relief in other areas.

When Treasurer Wayne Swan tomorrow releases the Rudd Government's long-awaited response to the Henry Review, most people will be looking to see how it effects their income tax, superannuation, business operations, petrol prices and car registration.

Steps to combat road congestion - either through a price-per-kilometre road pricing scheme - with or without a congestion tax - are widely tipped to be part of the tax review mix.

RACQ spokesman Jim Kershaw said the organisation did not object to a shift towards a national road pricing scheme where motorists contributed depending upon total kilometres driven.

But Mr Kershaw said motorists were "pretty heavily taxed now" and support for the proposal would come only if other conditions were met.

"We are open to the suggestion of a road pricing scheme, provided that motorists get some relief from taxation in other areas," he said.

"And fuel excise is one area we are thinking."

Infrastructure Partnerships Australia showed the Federal Government raised $15.5 billion from road related revenue, and state governments $6.12 billion in 2005-06.

State governments raise money from road through registration, stamp duty and licence fees, while the federal government derives revenue from fuel excise, the GST and fringe benefits tax.

IPA argues the current mix of fees and charges is inequitable, varies between states and does nothing to encourage drivers to fight congestion.

The Queensland government has received $920.4 million in vehicle registrations in the past 10 months, with its registration fees the highest of the Australia states, ranging between 17 per cent for four cylinder vehicles and 22 per cent for eight cylinders.

The federal government charges a fuel excise of 38.14 cents per litre, which already provides a way for motorists to pay more tax commiserate with kilometres travelled.

This generated $9.12 billion of the $15.5 billion collected from roads in 2005-06.

In a sample "per kilometre" pricing scheme put forward by the IPA which scraps all existing road charges, including vehicle registration, an average eight cents per kilometre charge has been proposed.

The IPA looked at three prices per kilometre, ranging from 4.6 cents to 10.4 cents per kilometre.

IPA executive director Brendan Lyon said its charges model showed it was possible to raise an extra $4 billion for infrastructure projects each year.

Under the IPA model, GPS technology would be used to keep track of drivers' locations.

Mr Lyon said the lowest "per kilometre rate" - for example, driving outside the central city and outside peak hour - motorists could end up paying less tax.

"Because we are discussing a three-tier charge, reflecting location and time of use, the base cost per kilometre could be substantially lower than what people pay now," he said.

Mr Lyon said a national road pricing scheme was about to go the Netherlands' parliament and a scheme was in place for heavy vehicles in Germany, Switzerland and Austria.

London has had an inner-city road congestion charge since 2002, which has boosted bus patronage by 14 per cent, while cutting vehicles in inner-city London by 20 per cent.

"The overseas experience of road pricing schemes has been positive, but they have worked best where all revenues go back into improving public transport and the road network," Mr Lyon said.

But, politically it could be difficult for Treasurer Swan.

Queensland's Labor Premier Anna Bligh told State Parliament on February 24 that cabinet had rejected a Queensland Transport suggestion for a 30-cents per kilometre congestion charge.

"I required those documents to be brought to cabinet so that government could make a decision on them," Ms Bligh said while under Opposition fire.

"You know what we decided? We decided not to adopt the recommendations.

"There will be no congestion charging by the state government for as long as this government is on this side of the House."

[O_128]

So in other words no congestion charging till 2012 

[ozbob]

The web site is hanging.  Report was due for release at 2.30pm, think the server might be overwhelmed ... eventually loading, very heavy traffic.

[ozbob]

The Treasurer's portal is hanging too ==> http://www.treasurer.gov.au/

Must be a metaphor for the likelihood of any real constructive change,  with a federal election looming tokenism will reign ...

[ozbob]

http://www.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2010/027.htm&pageID=003&min=wms&Year=&DocType=

Joint Media Release
with
Senator The Hon Chris Bowen
Minister for Financial Services, Superannuation and Corporate Law and Minister for Human Services

Stronger, Fairer, Simpler Superannuation Banking the Benefits of the Boom

The Rudd Government will deliver an historic boost to retirement savings to help prepare for an ageing population and ensure the Australian people get a fairer share of our mineral wealth.

Todays' announcements are the biggest reforms to superannuation since the introduction of compulsory superannuation in 1992 as part of our Stronger, Fairer Simpler: Tax Plan for our Future.

The Government's reforms will deliver substantial improvements in retirement savings and a fairer distribution of superannuation tax concessions, ensuring more Australians can enjoy a comfortable retirement.

The Stronger, Fairer, Simpler: Tax Plan for our Future superannuation reforms are:

A 12 per cent Superannuation Guarantee (SG) – commencing with a 0.25 increase in 2013-14 and 2014-15, followed by 0.5 increments until the SG reaches 12 per cent by 2019-20. The three year lead time recognises that employers and employees need to factor this into future wage negotiations.

A low income earners Government contribution – from 1 July 2012. The Government will provide a contribution of up to $500 annually into the superannuation account of workers on adjusted taxable incomes of up to $37,000. This will provide a reward for savings for low income earners by ensuring no tax is paid on SG contributions. The Government will also retain the co-contribution scheme.

Concessional superannuation contribution caps for those nearing retirement – from 1 July 2012. Workers aged 50 and over with superannuation balances below $500,000 will be able to make up to $50,000 in annual, concessional superannuation contributions. This measure is expected to benefit 275,000 people.

Raising the Superannuation Guarantee age limit from 70 to 75 – from 1 July 2013. The SG age limit will be raised to 75, which for the first time means workers aged 70 to 74 to be eligible to have SG contributions made on their behalf. Around 33,000 employees are expected to benefit from this measure.

These superannuation measures will cost around $2.4 billion over the next four years.

As a result of these reforms 8.4 million Australians will receive an increase in their retirement incomes, including 3.5 million Australians on lower incomes who do not receive tax incentives for saving through superannuation and older workers catching-up on their retirement savings.

An employee aged 30 today on average weekly earnings, will retire with an additional $108,000 in superannuation.

A female aged 30 today on average weekly earnings, with an interrupted work pattern, will retire with an additional $78,000 in superannuation.

The superannuation savings of 3.5 million Australians on lower incomes will be boosted by $830 million over the forward estimates.

Over the next 10 years, $85 billion will be added to Australia's pool of superannuation savings. A proportion of these savings will be channelled back into the Australian economy to fund jobs and nation-building infrastructure, ensuring our reliance on foreign funds is lower than it otherwise would be.

The measures the Government has outlined help address the challenges of an ageing population set out in the Intergenerational Report 2010 and also complement the Secure and Sustainable Pension changes made in the 2009-10 Budget.

The Government is determined to boost Australians' retirement savings so that whenever the mining boom ends, Australians have got something real and enduring to show for it. Our natural resources are finite, so we need to take action now to ensure we save some of the proceeds.

The Government will consult with industry on the implementation of these measures.

More information on the Stronger, Fairer, Simpler: Tax Plan for our Future is available at www.futuretax.gov.au.

CANBERRA
2 May 2010

[ozbob]

-->  http://www.futuretax.gov.au/pages/default.aspx

Investing in infrastructure --> http://www.futuretax.gov.au/pages/InvestingInInfrastructure.aspx

Fact sheet

STATE INFRASTRUCTURE FUNDING
Measure description

This measure will provide the States and Territories (the States) with a new infrastructure fund.
This will make infrastructure funding a permanent structural feature of State and Commonwealth budgets.

• The infrastructure fund will be paid to the States each year, with an initial total amount of
$700 million in 2012‐13.

• Funding will be distributed in a manner which recognises that resource rich States face large
associated infrastructure demands.

Rationale

World class infrastructure is essential to ensure that Australia continues to be an attractive place to set up a
business, creating new jobs for now and the future. The new infrastructure fund will help the States to
invest in the nation building infrastructure necessary to support improved living standards.
Investing in major infrastructure will help improve our potential to grow the economy into the future. Key
capacity‐building infrastructure, like ports and roads, are vital for all Australian industries, and for
Australian workers.

Key facts

The total amount of the infrastructure fund will start at $700 million in 2012‐13 and will grow over time.
This infrastructure fund will be distributed to the States in a manner which recognises that resource‐rich
States face large associated infrastructure demands. Resource‐rich States will receive relatively more
funding which can be used to support investment in infrastructure, including that necessary for the ongoing
development of the resource industry.

Indicative timeline

The final details for the infrastructure fund will be negotiated with the States.

The infrastructure fund will be paid to the States each year from 2012‐13 to coincide with the introduction
of the RSPT.

[ozbob]

The whole thing is largely a farce IMHO.

Back to the grind ... it is going to be a long battle  ...

[ozbob]

PRIME MINISTER
TREASURER

STRONGER, FAIRER, SIMPLER: A TAX PLAN FOR OUR FUTURE

The long term tax plan we announce today will strengthen the economy and make the tax system fairer and simpler for Australian working families and businesses. 

These are the first steps in a 10 year agenda that will help ensure we share prosperity fairly, maximise our opportunities, and keep Australia in the box seat as the global recovery gathers pace.

Australia faces important decisions about how we structure our tax system.

This package is carefully calibrated to make the most of the opportunities presented by commodity boom mark II, but also to address the challenges that it presents.

This is a long term plan to apply a Resource Super Profits tax to the profits earned from resources that are owned by all Australians, and use it to:

•   generate more superannuation savings for working families;
•   lower tax for all companies, especially small businesses; and
•   invest in our future infrastructure needs, particularly for mining states.

A Resource Super Profits Tax will ensure Australians get a fair share from our valuable non-renewable resources.

It will be a better way to tax resources because it only taxes profits and fully recognises the large investments made in resource projects.

It will also rebate State royalties paid by resource companies, and the Government will consult with the States on the implementation of this. The revenues will be used to deliver a stronger economy for Australian families.

Approximately one third of the package will directly assist the resources sector. A Resource State Infrastructure Fund will make infrastructure spending a permanent feature of Commonwealth and State budgets.

It will deliver $700 million in 2012-13 and more than $5.6 billion over the next decade, particularly for mining states.

Without infrastructure funding, capacity constraints will stand in the way of resource sector expansion. A Resource Exploration Rebate will help small exploration companies search for new deposits.

Roughly a third of the package will promote growth across the economy, addressing the risk of a "two-speed economy" by taking the brakes off the slower lane.

A phased cut in the company tax rate to 28 per cent will assist the competitiveness of all Australian industries. The Government will also seek to cut the company tax rate further, as revenue allows.

Small businesses will get a head start on the company tax cut, with the 28 per cent rate applying from 2012 13.

Small businesses will benefit from a new instant write off for assets worth up to $5,000. Depreciation for other assets will be simplified, reducing complexity, cutting red tape and providing up front tax relief.

Roughly a third of the package will be used to ensure that we save rather than squander the benefits of the current boom, and translate higher economic growth and wages into long term benefits and more secure retirements.

The superannuation guarantee will be gradually increased to 12 per cent. Around 3.5 million lower paid Australians will receive a concession on their superannuation guarantee contributions, for the first time. 

Over 50s with lower super balances will be given more generous contributions caps to allow them to make catch up contributions.

These superannuation measures will cost the Government $2.4 billion over the next four years.

These significant reforms will build sustainable growth with low inflation. They will attack potential capacity constraints in our economy and ensure that the proceeds from our mineral resources are dedicated to the best possible outcomes for our economy and our people.

A stronger economy benefits all Australians through more jobs and higher wages. The changes announced today are expected to increase Australian GDP by 0.7 per cent and real wages by 1.1 per cent in the long run. In current terms, this reform dividend is equivalent to an extra $450 per year in the pocket of a full-time worker on average weekly earnings.

These reforms will make our tax system fairer, by providing more Australians with a fair return for our natural resource wealth and by providing better superannuation concessions for over two million lower income earners.

The system will be simpler, especially for small businesses through simpler tax arrangements.

These changes will be consistent with our fiscal rules and will not detract from our ability to return the Budget to surplus and repay debt. This means that the package is dependent on the successful implementation of the Resource Super Profits Tax.

These reforms will not be welcomed by every business or every interest group, but they are the considered, responsible changes we need if we are to turn our success during the global recession into enduring gains for our economy, our people and our nation.

The Government's agenda for tax reform has been informed by the independent tax review, our discussions with the community and our own values and beliefs.

We will consult broadly on the changes, including with businesses, the states and the broader community.

Today we have announced that the first wave of our agenda is to reform resource, company and small business taxes and superannuation.

In the coming months we will have more to say on a number of other areas considered by the review, especially making tax time simpler for everyday Australians, improving incentives to save and improving the governance and transparency of the tax system.  This would represent a full second term agenda.

Other recommendations in the review are not government policy. We have called for a mature tax debate and expect the other recommendations to be the subject of much discussion in the coming years.

We thank the five eminent members of the independent review panel; Ken Henry, Jeff Harmer, John Piggott, Heather Ridout and Greg Smith, as well as the dedicated review secretariat who supported them.

We also thank the community for their extensive contribution to the development of the report we are releasing today.

Information about the Government's future tax plan is available on the Stronger, Fairer, Simpler website at www.futuretax.gov.au. People can subscribe to the site and receive regular updates and advice, or call 1800 614 133 for further information and to obtain hard copies.

CANBERRA
2 MAY 2010
PRESS OFFICE (02) 6277 7744
TREASURER'S OFFICE (02) 6277 7340



ATTACHMENT
Today we have announced that the first wave of our agenda is to reform resource, company and small business taxes and superannuation. We are also attracted to developing changes in a number of other areas considered by the review, especially making tax time simpler for everyday Australians, improving incentives to save and improving the governance and transparency of the tax system.  This would represent a full second term agenda.
Other recommendations in the review are not government policy. We have called for a mature tax debate and expect the other recommendations to be subject of much debate in the coming years.
In the interests of business and community certainty, the Government advises that it will not implement the following policies at any stage. Some of these are recommendations of the Australia's Future Tax System review, some are potential mis-interpretations of the recommendations.
•   Include the family home in means tests (see Rec 88c)
•   Introduce land tax on the family home – this is a state tax and thus an issue for the states (see Rec 52 & 53)
•   Require parents to work when their youngest child turns 4 (see Rec 85)
•   Hit single income families (see Rec 92 & 93)
•   Restrict eligibility to rent assistance for families (see Rec 103)
•   Do any changes to the tax system that harm the not-for-profit sector, including removing the benefit of tax concessions, raising the gift deductibility threshold or changing income tax arrangements for clubs (see Rec 9e, 13, 41, 43 & 44)
•   Reduce overall remuneration to the members of our defence forces (see Rec 6d, 8c & 9e)
•   Reduce the CGT discount, apply a discount to negative gearing deductions, or change grandfathering arrangements for CGT (see Rec 14 & 17c)
•   Remove the Medicare levy (see part of Rec 5)
•   Reduce indexation of the age pension (see Rec 84)
•   Remove the benefits of dividend imputation (see Rec 37)
•   Think of hitting pensioner and low income concessions for utilities, transport and other essential services (see Rec 107)
•   Introduce a bequests tax (see Rec 25)
•   Align preservation age with pension age (see Recommendation in AFTS Retirement income strategic issues paper)
•   Offer a government annuity product (see Rec 22)
•   Ask the States to charge market rents to public housing recipients (see Rec 106)
•   Abolish the Luxury car tax (see Rec 80)
•   Index fuel tax to CPI (see Rec 65)
•   Change alcohol tax in the middle of a wine glut and where there is an industry restructure underway (see Rec 71)
The Government also reaffirms that it will never increase the rate or broaden the base of the GST or remove tax free superannuation payments for the over 60s, which were both ruled out of the AFTS Terms of Reference.

http://www.deewr.gov.au/Department/Documents/Files/100502%20stronger%20fairer%20simpler%20a%20tax%20plan%20for%20our%20future.rtf

[ozbob]

From the Brisbanetimes click here!

Henry Review at a glance

Henry Review at a glance
May 2, 2010 - 2:51PM

HENRY TAX REVIEW AT A GLANCE

    * Introduction of a 40 per cent Resource Super Profits tax (RSPT) on profits earned from resources rather than production by July 1, 2012.
    * States will be able to keep existing royalties, but the federal government will provide companies with a refundable credit for current state royalties paid.
    * Resource Exploration Rebate to provide refundable tax offset at the company tax rate from July 1, 2011. Will apply to all resource companies, including geothermal.
    * New ongoing infrastructure fund to be established, with annual federal government contribution starting at $700 million in 2012/13. The fund will provide money to the states for infrastructure projects from 2012/13. 
    * Phased in cut of the company tax rate from 30 per cent to 29 per cent in 2013/14 and 28 per cent in 2014/15.
    * Small business will be eligible for the 28 per cent rate from 2012/13.
    * Small business will also be able to immediately write off assets valued at under $5000 and be allowed to write off other assets (except buildings) in a single depreciation pool at a rate of 30 per cent. 
    * Increasing the Superannuation Guarantee Rate from 9 per cent to 12 per cent by 2019/20.
    * Around 3.5 million low income earners on less than $37,000 will receive a $500 annual super top up from the government.
    * Raising the the super guarantee age limit from 70 to 75.
    * Over 50s with lower super balances will be given more generous contribution+ A higher concessional contributions cap of $50,000 for those aged 50 or over who have less than $500,000 saved in super. 
    * No changes to the GST rate or base.
    * Further changes to be announced later, including possible changes to income tax return process.
    * The changes are expected to increase Australian GDP by 0.7 per cent and real wages by 1.1 per cent - equivalent to an extra $450 per year in the pocket of the average full-time worker.

AAP

[ozbob]

From the Courier Mail click here!

PM Kevin Rudd taxes miners to pay for Henry tax review superannuation boost

PM Kevin Rudd taxes miners to pay for Henry tax review superannuation boost

    * by Stefanie Balogh, Emma Chalmers
    * From: The Courier-Mail
    * May 03, 2010 12:00AM

A $100 BILLION mega-tax on mining profits will future-proof the nation's economy, delivering Australians higher retirement savings and company tax cuts.

The Rudd Government's tax shake-up proposes a 40 per cent Resource Super Profits Tax and a gradual rise in the superannuation compulsory contribution from 9 per cent to 12 per cent by 2020.

The super changes would give a 30-year-old worker $108,000 extra when they retired, and increase national savings by an extra $85 billion over the next decade.

But Treasurer Wayne Swan's response to Ken Henry's tax reform blueprint shied away from immediately adopting the Treasury Secretary's radical plan for personal tax cuts worth $7 billion.

Mr Swan said it would not happen in the Government's next term if it were re-elected, but he did not take it off the long-term agenda.

Labor will head into next week's federal Budget and the upcoming election campaign with some modest promises including measures to make the personal income tax system simpler and fairer, and encourage personal savings.

Mr Swan said the Government would reduce the company tax from 30 per cent to 28 per cent.

About 2.4 million small businesses – which employ about half of Australia's private-sector workers – will get the tax break a year earlier from July 2012. They will also benefit from worry-free instant write-offs on deductions worth up to $5000.

Describing it as an ambitious package, Mr Swan said: "This will ensure that all Australians get a fairer share and the benefits of the boom."

He said Labor was determined not to sell Australians short and better manage the next turbo-charged commodities boom than the previous Howard government.

However, the Opposition says Labor has gone soft on real reform and launched a brazen tax grab that will slug small business and could kill off the mining boom.

Tony Abbott savaged the Rudd Government's response to its "root-and-branch" tax review yesterday, saying it was flimsy and ignored the vast bulk of recommendations.

While unions and the financial sector praised the Government's move to boost workers' superannuation, mining companies cried foul over the multibillion-dollar resource tax that will fund it.

The Queensland Resources Council said the new tax would put $100 billion worth of prospective projects at risk and the Association of Mining and Exploration Companies warned it would "bury" the industry.

The Opposition Leader said he was sceptical about the key decisions, warning small business will suffer under the $20 billion increase in the super guarantee levy and said the resource tax could "'kill the Golden Goose".

"We are deeply, deeply hostile to the idea of another great big new tax on the mining sector," Mr Abbott said.

Opposition Treasury spokesman Joe Hockey said mining companies already paid their way and the timid reform agenda was more evidence of a "gutless Government led by a gutless Prime Minister".

Queensland Treasurer Andrew Fraser said he was satisfied the review would not leave Queenslanders worse off and the new resources tax would deliver a fairer share of mining profits to the state.

"Queensland provides about 40 per cent of the value of mining production in Australia, so we'd expect a big chunk of this money," he said. The Greens vowed to use the Senate to push for their preferred recommendations out of the Henry Review, including more income support for students and the unemployed and congestion charges to fund public transport.

"This tax review was the opportunity to re-design our cities for people rather than cars and to remove the billions of dollars of subsidies to fossil fuel industries through fuel tax credits," Greens' Senator Christine Milne said.

The RACQ said it was disappointed transport reforms were ignored as a user-pays road system would cut congestion.

Unions and the financial services industry served up the warmest praise, welcoming the Government's decision to increase the compulsory superannuation contribution from 9 to 12 per cent by 2019.

The Industry Super Network said the decision will "supercharge" the retirement savings of Australian workers and could increase an average worker's super by more than $100,000.

Former prime minister Paul Keating, who introduced mandatory superannuation in 1992, lauded the changes and said they would give Australia the world's best retirement savings plan.

However, with the bouquets came plenty of brickbats for Treasurer Wayne Swan – accused of not going far enough.

The Australian Industry Group's chief executive Heather Ridout, a part of the Henry Review panel, said Labor had only touched a handful of 38 recommendations.

She urged the Rudd Government to consider proposals for congestion, gambling, alcohol and petrol taxes.

The Business Council of Australia warned the resources rent tax would deter investment.

The cut to company tax rates from 30 per cent to 28 per cent was welcomed, but the Australian Chamber of Commerce and Industry said it had wanted to see payroll tax abolished too.

The Australian Council of Social Service said the Government had missed an important opportunity to pick up recommendations that would alleviate the housing supply crisis and make welfare fairer.

The Australian Retailers Association said the reduction in company tax was not enough to help small business and retailers' calls for payroll tax relief were unanswered.

While winemakers praised the Government for ignoring the review's call for a volumetric tax based on alcohol content, the National Alliance for Action on Alcohol said the proposal would have increased prices on the riskiest products and addressed social harm.

[ozbob]

Media Release 3 May 2010

Australia:  We have missed the bus, train and the ferry!

RAIL Back On Track (http://backontrack.org) a web based community support group for rail and public transport and an advocate for public transport commuters has said the Federal Government's response to the Henry Tax review ignores most of the recommendations made in the review process particularly with respect to congestion management (1).  Unless congestion is brought under control it matters little with tinkering at the edges of superannuation and taxes as the costs of congestion will swamp any notional longer term gains.

Robert Dow, Spokesman for RAIL Back On Track said:

"The Henry Tax Review was a great opportunity to move forward with congestion management initiatives. A true user pays system for road use would have gone a long way to cutting the costs of congestion.  The State Infrastructure Funding description is vague and is under capitalised for a true meaningful impact (2)."

"Public transport throughout Australia needs significant investment.  For too long roads have sucked up most of the transport capital for little return.  Congestion costs are escalating and threaten to stagnate the economy.  The funding paradigm for transport needs turning.  The Henry Tax Review recognised that, it is to our peril that those recommendations were ignored."

References:

1. http://www.futuretax.gov.au/pages/default.aspx

2. http://www.futuretax.gov.au/pages/InvestingInInfrastructure.aspx

Contact:

Robert Dow
Administration
admin@backontrack.org

[#Metro]

Ross Gittins is scathing of it: http://media.brisbanetimes.com.au/national/national-news/the-tax-revolution-we-didnt-get-1402098.html&exc_from=strap

[#Metro]

Things gov will not do:   Index fuel tax to CPI (see Rec 65)

What's this all about? Why not?