Labor considers windfall gas tax amid Iran price spike
Andrew Brown and Jacob Shteyman |
The energy minister has kept the door open to new taxes on gas companies’ profits following reports the government is considering a windfall levy to capitalise on surging prices caused by the Middle East conflict.
Asked if he would rule out new taxes on resource companies in the upcoming federal budget, Chris Bowen refused to comment, saying it was up to the treasurer and cabinet.
The prime minister’s department has asked Treasury to model new levy options as well as reforms to the petroleum resources rent tax (PRRT) and corporate income tax, ABC News reported.
Mr 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,” Mr Bowen told ABC Radio on Friday.
“The budget’s in May, not in March, and is released by the treasurer, not the energy minister.”
Recent Israeli strikes on the massive South Pars gas field in Iran, and retaliatory attacks by Iran on the world’s largest LNG plant in nearby Qatar, have caused LNG prices to spike to the highest levels since 2022.
Analysts have warned it could take three to five years to restore full production to Qatar’s LNG infrastructure, meaning gas prices would remain elevated long after a resolution to the war.
The Greens have called for the government to impose a 25 per cent levy on gas exports as energy costs surge due to the war in the Middle East.
Greens leader Larissa Waters wrote to Prime Minister Anthony Albanese on Thursday, offering to help pass laws in the upcoming parliamentary sitting fortnight to impose the levy on gas companies.
Meanwhile, the Australian Conservation Foundation has proposed a 25 per cent windfall profits tax on gas exports.
The foundation’s chief executive Adam Bandt said big gas corporations were profiteering from war, profiting off the back of human misery and passing the costs onto the Australian people.
“With the upcoming budget, there’s a real opportunity for the government to rein in big gas greed and make them pay their fair share of tax,” the former Greens leader told AAP.
The gas lobby railed against the proposal.
Australian Energy Producers chief executive Samantha McCulloch said imposing higher taxes on gas producers would disincentivise investment in new supply and lead to higher energy prices.
“This would be the worst possible time for Australia’s economy and energy security to impose a new, retrospective tax on an essential energy sector,” she said in a statement, adding that gas companies paid $21.9 billion in taxes and royalties in 2024/25.
Independent MP Allegra Spender has called on the government to impose a 50 per cent tax on windfall profits.
She argued taxing profits above and beyond what companies would normally expect to receive would not discourage new investment.
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, which Iran has largely closed 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, due to generous uplift factors that allow companies to deduct profits.
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.
Independent senator David Pocock said the reports were encouraging as Australians should not be paying more tax on beer than the government collects from the PRRT.
AAP