The top rate that a mining company would pay under Labor's proposed resource super profits tax is 56.8 per cent, Treasury boss Ken Henry has told a Senate hearing.
Dr Henry, who led a review of the nation's tax system which included the recommendation for a resources rent tax, said the rate would be a combination of the 40 per cent super profits tax and the company tax rate which was being cut to 28 per cent from 30 per cent.
"56.8 per cent is a maximum rate," he told an estimates hearing today.
"Obviously a company that is not actually earning any super profit, then the tax rate is 28 per cent.
If a company's rate of return was "infinitely large" it would pay 56.8 per cent.
"Most taxpayers obviously don't have an infinite rates of return, so no tax payer we would suspect would actually pay the 56.8."
Dr Henry, in response to a question, said he was not aware of any proposal to slow the growth of the resources sector as a benefit to the overall economy.
I dont think anybody is seriously talking about there being a strong case for slowing the growth of the resources sector, he said.
Certainly it is not the purpose of the resources super profits tax to slow the growth of the mining sector.
Nor did he believe the tax would increase sovereign risk, as claimed by some large mining companies.
Even if it were the case, any such increase I would think would be a small fraction, he said.
Risk had been reduced by the government becoming effectively a partner through its commitment to underwrite 40 per cent of the projects expenditure.
Thats rather a significant reduction in risk, he said.I dont understand why there should be any perceived increase in sovereign risk at all.
Even if there were, it could only be a small fraction of that quite considerable reduction in properly assessed project risk.
Dr Henry said he saw the governments response to the tax review as a first instalment.
He was asked whether he thought the governments response to the review was small.
Dr Henry said it was not his job to judge the quality of the response, but did note there had been public debate and commentary on the proposals that had been put forward.
It seems to me, as somebody who has been, among other things, an observer of tax policy packages over a 25-year period, this does seem to be a pretty big one, he said.
