Queensland Nationals Senator Ron Boswell warned potential investors today not to put their money into carbon sink forests until the regulations for the Bill are finalised.
The new tax law will provide a tax deduction for capital expenditure for the establishment costs of trees in a carbon sink forest. According to Departmental modelling this measure is expected to affect 81,500 hectares of land by 2011.
“This measure will only disadvantage the farming sector and gives tax advantages to big carbon emitting companies to buy up prime agricultural land,” Senator Boswell said.
“The tax deduction is now law but we have an opportunity to stop this tree law now by disallowing the regulation that puts this legislation in place,” Senator Boswell said.
“This new law is a completely inoperable without the guidelines that spell out the environmental and natural resource management processes in relation to the establishment of trees for the purposes of carbon sequestration.”
“I have received advice from the Clerks Office and read into Hansard that ‘The important aspect of this is that either House acting alone may disallow such an instrument’
• Section 40-1005 provides for deductions if you comply with section 40-1010
• Section 40-1010 provides that expenditure is covered if you meet conditions
• One of the conditions is that you must meet the requirements of guidelines
• It is these guidelines – in subsection 40-1010 (3), which are disallowable
It would appear….. that it would not be possible to plant trees and incur “expenditure for establishing trees in Carbon Sink forests” unless those guidelines have first been made’
The Nationals Senators today won the support of the Senate to proceed with an inquiry into the ramifications of a new tax law that allows for a tax deduction on capital expenditure in the establishment of a carbon sink. The Senate inquiry will be carried out by the Rural and Regional Affairs and Transport Committee and will report by the 22nd August 2008.
The inquiry came out of concerns that the deduction would create an unfair advantage by allowing large companies to buy up prime agricultural land for tree production purely as a tax deduction.
“This is the classic argument of food versus trees and I believe that both should compete on a level playing field rather than one having a tax advantage over another.”
“This is a similar measure to the tax deduction that applies to Managed Investment Schemes which has had a detrimental effect on all broad-acre farming.”
“I would warn potential investors to hold onto their money until after the Senate inquiry which we suspect will provide sufficient evidence that this will be detrimental to rural industries. If it is detrimental there will be a disallowance motion moved,” Senator Boswell said.
“This is a lemon of a law that will potentially see prime agricultural land locked up for years all because of a tax deduction.”