Australia's Greens call for flood deferral of company tax cut
CANBERRA (Reuters) - Australia's minority government should defer planned company tax cuts to help pay the multi-billion-dollar cost of flood reconstruction, the influential Greens party said on Tuesday, rather than turning first to a special taxpayer levy.
Flooding blamed on a Pacific La Nina wet weather pattern has devastated huge areas of the eastern seaboard, killing 35 people, submerging parts of the third-largest city Brisbane, shutting vital coal mines and destroying crops.
While hard-hit Queensland state has begun cleaning up, a third of Victoria remains an inland sea with the rural hub of Swan Hill under threat and evacuation orders in place as authorities hurriedly try to build protective levees.
Greens leader Bob Brown said many corporates, especially coal miners and other resource companies, had made massive profits in recent years and should be asked to carry the burden for a recovery bill that could reach A$20 billion ($20 billion), with the flood threat still widening in Victoria state.
"Under the mining tax proposal from the government, corporations are looking at a one percent reduction in taxation after the next financial year. The government might reconsider that as one of the options to help pay for the flood damage," Brown told national radio.
Prime Minister Julia Gillard won support last week from key independents propping up her one seat majority for a possible tax levy to help pay for reconstruction, while also allowing the government to deliver a promised 2012-13 budget surplus.
Gillard's government also relies upon Greens support to pass legislation, raising business fears that the party could use its influence to impose more costs on companies.
Rebuilding estimates from banks and economists have mostly ranged from around A$3 billion to A$10 billion, but ANZ bank said it could come in at around A$20 billion when waters subside and the scale of devastation becomes clear.
Gillard and Treasurer Wayne Swan could make an announcement on Thursday on whether a one-off levy will be imposed, with both making major speeches around the January 26 national day holiday.
Swan on Friday will give an estimate of the damage bill for roads, bridges and railway lines facing the government, but unnamed senior figures told the Sydney Morning Herald newspaper it would be "nowhere near" the A$10 billion being touted.
The government is fine-tuning plans for a 30 percent profits-based tax on coal and iron ore miners from July 1, 2012 to fund a one percent cut in company tax to 29 percent, and also help boost worker retirement pensions.
Brown, whose party helps wield balance of power in the upper house Senate and also controls one crucial seat in the lower house where Gillard's Labor has a one vote majority, said he supported a flood levy, but it would need careful targeting.
"We would want to see how that levy was going to be placed, which section of the community it's going to burden the most. It would be better if low income earners were exempt," he said.
Gillard's conservative opponents attacked the levy idea as unnecessary and demanded the government wind back stimulus spending meant to combat the world downturn and delay building of a A$36 billion government-backed broadband.
Conservative finance spokesman Andrew Robb said the government had available A$15 billion in unspent stimulus money that should be redirected to flood assistance.
An Essential Media poll released on Thursday found Gillard had eclipsed the conservatives in handling the flood crisis, with 42 percent of voters nationally rating her leadership as good compared with 19 percent for Opposition Leader Tony Abbott.
(Editing by Ed Davies)