Log tax hike queried

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FOREST Industries Association president Tony Honey, pictured, has questioned the logic and basis for the 50 per cent increase in the log export tax announced in next year’s national budget.
He said export prices were currently at a depressed level and export demand remained weak.
In addition, international market analysts are forecasting continued weak markets throughout next year with no significant improvement until 2018-19.
Honey said this was dependent on economic recovery and stability in China, “our largest export market”.
“The apparent conflict between statements made by the Chief Secretary (Isaac Lupari) on the tax increase are confusing and will lead to an immediate collapse in investment and job creation in the forest sector,” he said.
“How is it possible to say that there is no point in increasing taxes when we are going through financial difficulties?
“And then, that we are looking at that, log export taxes, closely to ensure that tax (increase) does not impact on the industry in a negative way?
“Of course, a doubling of the turnover tax – that’s what export tax is.
“(It) will have negative impacts on the industry most certainly and we are seeing this already.”
Honey said cutting any company’s cash flow by 50 per cent during a market depression was a recipe for disaster.
“Many forest industry participants are already planning for a significant scale down of operations and staff retrenchments beginning Jan 1,” he said.
Honey said contrary to Government claims that the tax increase would boost downstream processing, “it will have the opposite effect”.
“Our largest processing factories are in our logging concessions in many cases recovering low grade logs,” he said.
“Therefore, cutting back logging as a result of punitive taxes will have a flow on effect and reduce domestic processing. If the logging industry closes, where will the factory log input come from?”

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