Article by Katina Curtis courtesy of the West Australian.
The gas industry is bracing for higher taxes in next week’s Federal Budget amid reports changes will raise another $3 billion from the sector.
The Government has been considering changing the petroleum resource rent tax (PRRT) after it received options that Treasury has been working on for years.
Those tweaks to the tax will be included in Tuesday’s Budget, a source familiar with the changes confirmed to The West. It will reportedly reap an extra $3b over the next four years.
The tax applies to profits from offshore LNG projects, most of which are off WA.
It is forecast to raise $2.6b in the current financial year but that figure will fall over the coming years to $2b in 2025-26.
The October Budget said it was expected to raise a total of $9.15b over four years.
The Greens, independents and some economists argue the PRRT revenue is far too low given gas company profits have soared during the global energy crisis sparked by Russia’s invasion of Ukraine.
Treasury started work on ways to increase the tax under former treasurer Josh Frydenberg, but the review was put on ice during the pandemic.
On Tuesday, Treasurer Jim Chalmers said “a decision hasn’t been taken” about whether PRRT changes would be included in next week’s Budget or dealt with later in the year.
He told The West on Thursday he would have more to say about the plans “in due course”.
The Australian Petroleum Production and Exploration Association declined to comment on the specifics of the tax hike beyond outlining the contribution the sector already made to government revenues.
“Australia’s oil and gas industry is already delivering increasing returns to governments as part of a broad economic contribution that will almost triple to $16 billion in direct taxation receipts this financial year while employing 80,000 workers and spending $45 billion on Australian goods and services this year,” chief executive Samantha McCulloch said.
Premier Mark McGowan urged the Federal Government last month to make sure any changes were “relatively light touch”.
Woodside chief executive Meg O’Neill has also cautioned the Government against overreach on taxes.