Henry is back from the dead. A firm commitment from Labor to leave the tax review alone for the rest of the term has been replaced by a commitment to open the whole Henry Review up for discussion, culminating in a public tax summit mid next year.
High among the items for discussion at the summit will be an idea both sides regarded as too radical to embrace during the campaign, although the Coalition gave a nod in its direction - one simple flat tax rate of 35 per cent applying to all but the highest earners, balanced by a very high $25,000 tax-free threshold.
All manner of tax breaks and offsets would vanish and welfare payments would be simplified and largely removed from interaction with the tax system as a result of the high threshold.
Henry wants to tax fringe benefits and super contributions as income (which they are) and eliminate the need most personal tax returns. Labor adopted these ideas half-heartedly and, in the case of super, explicitly rejected them.
With them back on table, able to be examined objectively and openly, Henry's back with a chance.
The spectre of a 40 per cent super profits tax once again haunts the mining industry now that a government committed to a mining tax will have to deal with the Greens in the Senate to get it passed.
The deal hammered out between Gillard and the big three miners ahead of the election cut the effective tax rate from 40 to 22.5 per cent and limited it to just iron ore and coal.
The Greens will hold the balance of power in the Senate after July and have said they will only support the tax at the originally-proposed rate of 40 per cent with the proceeds set aside to create a sovereign wealth fund.
Independent Robb Oakeshott also wants the original proposal back on the table as part of a proper debate about tax reform, set to culminate in a tax summit mid next year.
BHP and Rio share prices fell on the deal between Labor and the independents and the Association of Mining & Exploration Companies fired the first shot in a new war releasing a statement headed "No mandate! No tax!"
Published in today's Age
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