Small beer: revenue from gas export tax set to plummet
Despite a rise in liquefied natural gas prices due to the Iran war, Australia’s gas export tax is expected to drop.
Higher commodity prices will increase company tax revenues by $6.7 billion in 2026/27, according to new forecasts announced in the federal budget on Tuesday.
But despite rising oil and LNG prices since the beginning of the conflict in the Middle East, revenue from the oil resource lease tax has been revised down by $100 million to $1.4 billion for the current financial year, compared to forecasts in December’s mid-year budget update.
PRRT revenue is expected to rise to $1.9 billion in 2026/27, mainly due to the high oil price, then decline each year until it reaches $1.25 billion in 2029/30 as the oil price stabilizes.
In comparison, the beer excise tax is estimated to bring in $3.1 billion in 2029/30.
A social media post by Independent Senator David Pocock highlighting the inequality between the two revenue streams has led to a huge surge of support ahead of the budget for changes to how gas exports are taxed.
Despite a Senate inquiry finding the PRRT was ineffective, Labor decided not to touch the tax, citing concerns it could anger major fuel suppliers who depend on Australian gas.
Finance Minister Jim Chalmers also highlighted changes made under the previous Labor government to ensure gas companies pay tax earlier at the start of projects.
But the government left the door open to further changes in the future.
Labor senators attending the inquiry recommended the Treasury review Australia’s tax settings once the fuel crisis is over.
Instead of eliminating taxes on gas exports, the government has accelerated steps to create an east coast domestic gas reserve that will require gas companies to divert 20 percent of supply to the domestic market from July 2027.
The government allocated $35.5 million from the budget to support reserve implementation and streamline gas regulatory frameworks.
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