A tycoon tax would end tax breaks for corporations profiting from Australian gas and spread the wealth among communities, under a Greens’ plan.
The Greens pledged on Wednesday to end the “brain-dead, trickle-down” taxation of oil and gas under past governments, if they win the balance of power at the May 21 election.
To encourage exploration, companies have been allowed to deduct all exploration expenses in areas covered by the Petroleum Resource Rent Tax (PRRT) regime that dates back to the 1980s.
“WA is being taken to the cleaners by big coal and gas corporations, and Australians are being ripped off,” Greens Leader Adam Bandt said, hitting the campaign trail in Karratha, the powerhouse of the Pilbara.
“Woodside, Chevron and Exxon get free gas from this tax rort and then make obscene profits that they send offshore.”
The tax regime was designed for profitable and easier-to-assess oil projects, not the vast LNG fields that take longer to turn a profit but have evolved into world-leading projects wrapped in confidential long-term supply contracts.
The Greens say they would repair the “broken super-profits tax” on the profits of those operating in the Gorgon, Wheatstone, Pluto and Prelude gas fields and levy new royalties.
“Our state currently gets more revenue from car registrations than we do from the multibillion-dollar gas industry,” Greens Senator for WA Dorinda Cox said.
Revenue raised through wiping tax credits and new royalties would fund hospitals and housing, get dental and mental health into Medicare, make child care free, raise welfare payments and erase student debt.
The federal government has tweaked the design and operation of the tax regime to fix some design flaws, passing legislation two years ago that it said would rake in an extra $6 billion over the following decade.
Under the original PRRT, tax revenues were in decline because gas projects could make large losses on paper even as they were exporting gas at high prices.
Officially, the PRRT is levied at a rate of 40 per cent of a project’s taxable profit.
But critics say two-thirds of Western Australia’s offshore gas projects still pay almost no tax and the tax office has told parliamentary inquiries that some will never be liable.
The Greens’ plan has been costed by the independent Parliamentary Budget Office (PBO), which found it would add more than $92 billion to the fiscal balance over the decade.
But the PBO said it is possible that some projects would close sooner than they otherwise would, because the proposal could make them unviable.
The federal Treasury has recognised Australians receive poor revenue returns for the gas, compared to similar economies, and is reviewing pricing arrangements for LNG projects – from field to processing.