Door open for gas company windfall tax as costs surge
As energy costs spike due to war in the Middle East, the federal government won’t rule out hiking taxes on gas company profits.
The energy minister has not ruled out fresh taxes being imposed on the profits of gas companies due to the Middle East conflict.
Chris Bowen has kept the possibility open for a windfall tax on gas companies in the upcoming federal budget, following reports the prime minister’s department requested Treasury modelling on the measure.
Treasury was asked to model new levy options, as well as reforms to the petroleum resources rent tax (PRRT), the ABC reported.
Bowen said any decisions on taxes in May’s federal budget rested with Treasurer Jim Chalmers.
“The treasurer’s made clear that tax reform is on the government’s agenda, and he’s considering the way to maximise the efficient collection of tax in Australia,” Bowen told ABC Radio on Friday.
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“The budget’s in May, not in March, and is released by the treasurer, not the energy minister.”
The Greens had called for the government to impose a 25 per cent levy on gas company profits as energy costs surge following the war in the Middle East.
Recent Israeli strikes hit the South Pars gas field in Iran, the largest in the world.
In response, Iran hit the world’s largest LNG plant in nearby Qatar.
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Greens leader Larissa Waters wrote to Prime Minister Anthony Albanese on Wednesday offering to help pass laws in the upcoming parliamentary sitting fortnight in March to impose the levy on gas companies.
“Even if the war ended tomorrow, the restoration of these production facilities will take months to years,” Waters wrote.
“While this supply shock will hit consumers and businesses right around the world, it will produce a deep and sustained financial windfall to Australian LNG exporters.”
Independent MP Allegra Spender wanted the government to impose a 50 per cent tax on windfall profits, with energy analysts warning prices could reach record highs.
Qatar is the world’s largest liquefied natural gas exporter, and about 20 per cent of global gas supply passes through the Strait of Hormuz, largely closed by Iran during the conflict.
The PRRT, which is designed to capture above-normal profits from gas and oil companies, has only raised $1.4 billion per year between 2019 and 2015.
That’s due to generous uplift factors that allow companies to roll forward losses.
Superpower Institute chair Rod Sims has called for a Norway-style levy of 40 per cent on the cashflow of Australian gas producers, which he says would raise about $27 billion per year if gas prices approached the peak of the Russia-Ukraine war.
-with AAP
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