Door open for gas company windfall tax as costs surge
The energy minister did not rule out new taxes on gas companies’ profits due to the conflict in the Middle East.
Chris Bowen has kept open the possibility of a windfall tax on gas companies in the upcoming federal budget, following reports that the Prime Minister’s Office has requested Treasury modeling on the measure.
According to ABC news, the Treasury has been asked to make reforms to the petroleum resources rent tax (PRRT), as well as new tax options.
Mr Bowen said any decision on taxes in the May federal budget was up to Finance Minister Jim Chalmers.
“The Treasurer has made it clear that tax reform is on the government’s agenda and he is considering how to maximize the efficient collection of tax in Australia,” Mr Bowen told ABC Radio on Friday.
“The budget is announced in May, not March, and by the treasurer, not the energy minister.”
The Greens had called on the government to impose a 25 percent tax on gas companies’ profits due to rising energy costs following the war in the Middle East.
Israel’s latest strikes hit the South Pars gas field in Iran, the largest in the world.
In response, Iran hit the world’s largest LNG facility located near Qatar.
Greens leader Larissa Waters wrote to Prime Minister Anthony Albanese on Wednesday, offering to help pass legislation to tax gas companies during the two-week parliamentary session in March.
“Even if the war ended tomorrow, the restoration of these production facilities would take months, even years,” Senator Waters wrote.
“Whilst this supply shock will hit consumers and businesses around the world, it will deliver a deep and sustainable financial benefit to Australian LNG exporters.”
Independent MP Allegra Harcama called for the government to impose a 50 per cent tax on windfall profits, as energy analysts warn prices could reach record levels.
Qatar is the world’s largest exporter of liquefied natural gas, and about 20 percent of global gas supplies pass through the Strait of Hormuz, which was largely closed by Iran during the conflict.
PRRT, designed to extract above-normal profits from gas and oil companies, raised just $1.4 billion annually between 2019 and 2015.
This is due to generous bullish factors that allow companies to carry losses forward.
Rod Sims, chief executive of the Superpower Institute, has called for a Norwegian-style 40 per cent tax on the cash flow of Australian gas producers; If gas prices approached the peak of the Russia-Ukraine war, it would raise about $27 billion a year, he said.
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