The federal government has no intention of keeping business tax concessions that are linked to the mining tax, despite a number of business lobby groups urging for their retention.
These groups want the loss carry-back provisions measure kept and the small business instant asset write-off to stay at $6500 rather than being reduced to $1000.
Both those provisions were supposed to be funded by the former Labor government’s minerals resource rent tax (MRRT) among a host of other initiatives, such as the SchoolKids Bonus.
However, the MRRT has failed to deliver the revenue that was initially promised.
Finance Minister Mathias Cormann said the repeal of the MRRT we will be one of the first pieces of legislation that will be introduced into the new parliament.
“Labor made a whole series of unfunded promises that they attached to their failed mining tax,” Senator Cormann told reporters in Canberra on Monday.
“The budget we inherited from Labor is a mess,” he said.
He said repealing the MRRT and associated initiatives will help repair the budget to the tune of $13.4 billion.
However, shadow treasurer Chris Bowen said the loss carry-back and instant asset write-off concessions reduce compliance costs for small business and are supported by a number of groups, including the Council of Small Business of Australia.
“Labor will be voting against the MRRT repeal legislation because it will mean the government imposing higher taxes on small businesses,” he said in a statement.
“In the same breath as claiming they want to cut red tape, the coalition are increasing compliance costs for small business.”
The Australian Industry Group in its submission to the draft legislation to repeal the MRRT said that keeping these two small business oriented initiatives would cost $3.8 billion over the federal budget’s four-year forward estimates.
But it argues that this “lost” revenue is in reality deferred as in both cases it is essentially a matter of timing of legitimate deductions.
“Both measures have a strong policy rationale and their retention would boost investment and cash flow to the particular benefit of smaller businesses,” it says.
The Australian Chamber of Commerce and Industry acting chief economist Burchell Wilson would also like to see these tax concessions retained.
“But we understand the government has inherited a very difficult budget position … these concessions are currently unsustainable,” he told reporters in Canberra.