Document 11

Section 22

Section 22

Section 22

APPENDIX 8: COSTING REPORT-PRO-FORMA

Name of policy  casted:	Deny  the mining industry access to fuel tax credits	
Person making the request:	Senator  Milne, Leader  of the Australian Greens	
Date  received  from  Prime
Minister's office:	5 September 2012	
Summary of policy:	Deny  the mining industry access to fuel  tax credits from
1 January  2013	
Additional information requested (including date):	Not applicable	
Additional information received (including date):	Not applicable	

Impact on	2011-12	2012-13	2013-14	2014-15	2015-16	
Underlying Cash
Balance ($m)	0	700	1,790	1,300	1,330	
Fiscal Balance ($m)	0	1,000	1,740	1,350	1,330	

FINANCIAL IMPLICATIONS (Outturn prices)(a)

(a) A

. . e number  for the f1scal balance indicates an mcrease 1n revenue or a decrease 1n expenses or net capital

pos1t1v

investment  in accrual terms. A positive number for the underlying  cash balance indicates an increase in revenue or a decrease in expenses or net capital investment  in cash terms.

Costing  assumptions.

The costing  assumes  that  the mining industry classification from  the Australian Taxation Office's  Taxation Statistics is a reasonable proxy  for claims  relating to mining activity. See the Further information section  for more  discussion of this.

Mining  industry fuel tax credit  claims  average  41.6% of all fuel tax credit  claims  over  the period  2006-07 to 2009-10. This proportion is assumed  to remain constant over  the forward estimates period.

The fuel tax credit percentage is also assumed  to hold  for the  fuel emissions that  would be covered  by the opt-in arrangements that  allow  businesses  to acquire  permits rather than  have their  fuel tax credits  reduced. It has not  been possible  to confirm this assumption against  Department of Climate Change  and Energy  Efficiency  data and therefore may  be subject to revision.

It is assumed  that  businesses  with  mining-related fuel  emissions would  not opt  into  the carbon  permit system  for their  fuels.

Removing fuel tax credits  will increase  business  deductions for fuel which  will  reduce company tax.

It is assumed  that  there  is no behavioural response  on fuel volumes. QuaIifications.

This costing  is heavily reliant on assumptions, has a low reliability and potentially subject to revision.
Further information

•	Fuel tax credits are based on activity criteria rather than  industry classification. The

true  cost of the proposal will vary  to the  extent that  mining entities carry  on
non-mining activities and non-mining business  entities carry  on mining activities.
•	The estimates incorporate the Government's Clean Energy  Future  policy  regarding the imposition of carbon  pricing  on business  fuel use.
• 		In fiscal  balance  terms, the proposal  has the following changes  to revenue and expenses  over  the forward est1mates pen.od :
	2011-12	2012-13	2013-14	2014-15	2015-16	
Revenue  (Carbon  permits) ($m)	0	0	-250	-250	-300	
Revenue  (Company tax) ($m)	0		-210	-600	-570	
Expense  (Fuel tax  credits) ($m)	0	-1,000	-2,200	-2,200	-2,200