Gas giants warn against windfall gains tax as Pocock says ‘wartime profits’ should go to struggling Australians | Energy
The gas giants will lobby against any move by the federal government to impose a 25% export tax on windfall profits; as crossbenchers will pressure the prime minister to divert billions of dollars from “wartime profits” to struggling Australians amid the global energy crisis.
It comes after the Prime Minister’s Office asked the Treasury to model the effects of imposing a 25 per cent flat tax on gas exports. ABC reported on FridayAlong with other changes to the petroleum resource rent tax (PRRT) and corporate income tax.
The issue is sparking a fierce political row as global prices soar following Israeli and Iranian attacks on gas fields in the Gulf, with parliament meeting next week with different MPs including David Pocock and advocacy groups demanding the government raise billions of dollars in potential revenue by taxing exported Australian gas.
Pocock has been pressing the government in recent months to stabilize struggling households by collecting more tax on fuel exports; Anthony Albanese suggested it sought to “encourage complaint”.
The ACT senator said the government “could eventually cave in to pressure, burdening others, and particularly Australians in communities across the country, to tax gas companies making wartime profits.”
“Australians already pay more for oil and we shouldn’t pay more tax on beer than the government does for the oil resource rent tax,” he said on Friday.
According to the mid-year economic and fiscal outlook, the tobacco excise tax is expected to generate $5.45 billion in revenue in 2025-26, while alcoholic beverages and beer taxes are expected to flow $3.4 billion and $2.7 billion into government coffers, respectively. During the same period, PRRT is expected to raise $1.5 billion.
But the Australian Energy Producers, the gas industry’s peak representative body, said a 25% tax on its exports would come at “the worst possible time for the Australian economy and energy security”.
“Imposing higher taxes on Australian gas producers will stop investment in new gas supply, leading to gas shortages, higher energy prices and the closure of Australian industries that rely on reliable and affordable gas,” said AEP chief executive Samantha McCulloch.
The federal government has so far resisted any pressure for higher taxes on the sector, with resources minister Madeleine King telling parliament earlier this month that this would “deter investment in the new supply we need to support our transition to net zero”.
“We need gas as a booster capacity for renewable energy sources, whether solar or wind,” King said.
But Energy Minister Chris Bowen did not rule out the issue when asked on Friday.
“The Treasurer has made it clear that tax reform is on the government’s agenda and that he is considering ways to maximize the efficient collection of tax in Australia,” he said on ABC radio.
The increase in attacks since the start of the Israeli-US war against Iran in February has sent shockwaves through the global energy market.
On Wednesday night, Israel struck Iranian facilities used to process gas from the nearby South Pars gas field, which it shares with Qatar.
Iran retaliated on Thursday by attacking the Qatari gas hub Ras Laffan, where the state-owned company reportedly damaged facilities that produce 17% of its liquefied natural gas (LNG) export capacity. QatarEnergy told Reuters it would take three to five years to repair them.
The attacks have already increased international prices of gas and Australian gas exporters are expected to profit from increased demand and limited supply.
A report by the progressive think tank Australia Institute, It is estimated that Australia will receive If a 25% tax were imposed on gas exports, Iran would generate approximately $17 billion in tax revenue annually from gas producers by 2022, based on pre-war levels.
Greens leader Larissa Waters wrote to Albanese on Thursday to offer support for the minor party to pass a bill in the next two-week session, saying the proceeds could be earmarked for “immediate living expenses.”
“Millions of Australians are doing this hard and these rich companies shouldn’t be getting a free ride while people are going backwards,” Waters said.
But shadow treasurer Tim Wilson said it would be “next level denial to consider adding new taxes to address the fuel and energy crisis as they would freeze investment and private employment growth”.
The Chamber of Mines and Energy WA said Australia was protected from international gas shocks because investors viewed the country as a “stable, reliable place to invest”.
Aaron Morey, the chamber’s chief executive, said the proposed tax would risk “undermining that reputation and damaging the living standards of future generations of Australians”.
“This will significantly increase the risk to the country at a precise moment when we need more gas, not less,” he said.
