TAX NEWS - JUNE 2010

Australia's Future Fund joins attack on mine tax

The federal government's 61 billion dollars (50.3 billion U.S. dollars) Future Fund called for the proposed mining super-profits tax to be completely revamped or abandoned because it is a risk to investment and a short-sighted use of the nation's resources, local media reported on Saturday.

David Murray, the former Commonwealth Bank chief executive who is the chairman of the Future Fund, on Friday joined a chorus of business leaders decrying the design and implementation of the resource super-profits tax.

Murray described the mining tax as significantly flawed, saying it robbed future generations and represented a risk to Australia's international investment reputation.

In an interview with Business Spectator, Murray said that if Australia could not "achieve a design that does not penalize the existing projects -- that's a sovereign risk issue and a design that does not discriminate between recurrent spending and long- term intergenerational wealth creation -- if those things can't be done, the tax should be abandoned."

Murray also said it did not matter in the longer term if the budget were returned to surplus in three or four years' time and that "this tax could cause more trouble". "It's a long-term tax being applied to a short-term purpose, really, that's where the problems arise," Murray said.

Asked to comment on Murray's criticism, a spokesman for Prime Minister Kevin Rudd said the prime minister had "made his position on the government's tax reforms very clear". "They will deliver a fairer share of Australia's natural resources to all Australians, through better super, lower tax for small businesses and companies, and better infrastructure," the spokesman said.