After all the complaints about the pain that was going to be caused by the mining tax, it now turns out the tax has been pretty painless all round since it has failed to raise any money.
The Greens are calling for the tax – properly known as the Minerals Resource Rent Tax – to be reformed after it was revealed this week the tax only raised $126 million in its first six months of operation, significantly short of the estimated $2 billion expected in its first financial year.
Yesterday, Treasury secretary Martin Parkinson admitted it is the design of the mining tax which is responsible for its failure not the falling commodity prices, higher currency or state royalties blamed by the federal government.
You may think this is irrelevant to small and medium-size businesses since most mining companies fit more easily into the category of huge to ginormous business.
But here’s the rub, the government’s budget is going to come up significantly short and it’s likely to be ordinary taxpayers and small business that the government will target to make up the shortfall.
The government had linked significant amounts of spending for small business and superannuation to the tax and it’s unclear where that money is going to come from now.
While the Greens are advocating closing the loophole which allows state governments to lift royalty charges, which must then be refunded by Canberra to save more than $2.2 billion, there’s little chance of this happening.
It’s unlikely the government will dare touch the mining tax again to try and ensure it actually raises some cash.
This was the tax that brought down a prime minister after all; and the watered down MRRT was then negotiated by Prime Minister Julia Gillard with three mining groups after she seized the leadership from Kevin Rudd in June 2010.
Just in case the government gets any ideas, the big mining companies have taken out huge full page ads in the major newspapers this week pointing out how much tax they pay.
Sadly, the mining tax saga shows that those with the slickest and most well-funded public relations machine pay the least tax.
Small business has neither of those things going for it, so it is likely to be a target in any move to find extra cash.