Reforming the Petroleum Resource Rent Tax

by David Richardson

The present PRRT generates no revenue until the project sponsor gets back all their capital together with the permitted uplift factors. The problem with this approach is that no PRRT revenue is generated for many years which might exceed the life of the project and/or outlast the high returns—the economic rent that should be taxed.

We suggest the PRRT be reformed so that any high return on funds employed will generate revenue irrespective of whether the project sponsor has recovered their investment, augmented by generous uplift factors. It is important that the ultimate owners of Australia’s resources, the Australian people, get their fair share, particularly during times when the industry is earning substantial windfall gains. This reform to the PRRT will achieve this.

Full report