Australia Rejects IMF's Tax Reform Ideas

by Mary Swire, Tax-News.com, Hong Kong

05 October 2010

While welcoming the positive findings in the latest review by the International Monetary Fund (IMF) of the Australian economy, Wayne Swan, Australia’s Deputy Prime Minister and Treasurer, has ruled out accepting either of its main tax recommendations.

The IMF welcomed the government’s proposed reforms of mining taxes, and said that they were a “step in the right direction”, but it looked for their broadening to cover other mineral resources.

The current mining tax proposals by the government result from negotiations with the largest Australian mining companies, which were finalized in July this year by an agreement that the new mineral resources rent tax (MRRT) would be restricted to the two largest commodities in the sector, iron ore and coal. Commodities such as bauxite and copper were eliminated from the MRRT, as was the growing uranium mining industry (which the Greens party has since pressured to be re-admitted).

However, Swan confirmed that the current MRRT proposals would not be altered. In an interview, he said that: “We've already reached a breakthrough agreement with the miners”. There is a timetable for consultations on the MRRT through a tax advisory group, and for its introduction to parliament.

In response to the IMF’s recommendation that there should be greater reliance on consumption-based taxes, to allow for reductions in federal personal income tax, he also confirmed that the government had no intention of increasing the current 10% rate of the goods and services tax (GST), which already applies to most consumer transactions. He further confirmed that it would not be on the agenda of the tax committee planned for next year.

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