Things that raise more revenue than the PRRT
This budget saw changes to the Petroleum Resource Rent Tax (PRRT). The PRRT is a tax that is supposed to collect more revenue from the gas industry when gas prices are high and the industry is making large profits. The idea is that the gas is owned by all Australians, and when prices are high the Australian people should share in the revenue that those high prices generate.
The problem is that recently, despite sky high gas prices because of sanctions on Russian gas following its invasion of Ukraine, the PRRT hasn’t really generated very much extra revenue. Will the change in the budget fix this?
Well, the gas industry came out in support of the changes, which should be a worry if we’re hoping it will actually collect Australia’s fair share. The gas industry likes to talk a big game when it comes to tax but, in the past, they have seemed reluctant to support measures that would collect significantly more tax.
Australia Institute research has shown that the gas industry reaped up to $40 billion in windfall war profits last year. That makes now the perfect time to collect more revenue. But the changes in the budget show only minimal extra PRRT revenue. Even projecting forward to 2024-25, when the PRRT changes will be fully implemented, the PRRT will still generate very little revenue. In fact, the Figure below shows other revenue sources that collect more money than the PRRT.
We can see the PRRT at the end earning $2.7 billion in 2024-25. This is less than tobacco tax, fringe benefits tax, visa application charges and even the excise tax on beer. While countries like Norway and other Middle Eastern States are raking in extra revenue from gas, Australians will continue to miss out.
Tanya Martin Office Manager
Jake Wishart Senior Media Adviser