Australia's Gas Tax Crisis: Calls for a Fair Share Levy to Boost Revenue
As regular Australians grapple with soaring energy costs and inflation, gas companies are making massive profits while paying minimal taxes. This situation is described as perverse by experts like Rod Sims, who argues that Australia's gas resources belong to all citizens and should benefit the nation fairly, rather than being hoarded by largely foreign-owned corporations.
The Push for a Permanent Solution
The Albanese government is reportedly considering an extra levy on gas producers' high profits, driven by crises like the Iran conflict that are inflating energy prices. The prime minister's department has requested Treasury modelling for such measures, stating that energy producers should not profit from high international prices at the expense of domestic customers. However, Sims advocates for a longer-term approach: a fair share levy (FSL) to address Australia's chronic undertaxing of gas resources.
Based on models used by Norway and the UK, the FSL would ensure gas companies pay a fairer share of taxes, boosting national prosperity and providing cost-of-living relief. Currently, Australia shares only 27% of fossil fuel profits through corporate tax, royalties, and the petroleum resource rent tax (PRRT), compared to 75-90% in other major exporting countries. Under the FSL, this would rise to nearly 50%, still at the lower end of global standards.
Immediate Benefits and Revenue Potential
If implemented, the fair share levy could have provided significant financial relief. Since the start of the Iran crisis, it would have increased government revenue by $1.6 billion, with more raised in four weeks than the PRRT averages annually. During peak prices in the Russia-Ukraine war, the levy could have generated $27 billion—14 times more than the PRRT. These funds could directly support households struggling with high fuel prices, offering immediate cost-of-living assistance.
Research by the Redbridge Group for the Superpower Institute shows overwhelming public support, with 87% of voters agreeing that Australians deserve a better return from gas exports. Only 3% disagree, highlighting widespread frustration with the current system.
Addressing Industry Concerns
Opponents, including the gas industry, argue that a levy could raise prices and deter investment. However, Sims counters that the FSL's unique design, proven in Norway with a 72% levy rate, avoids these issues. By sharing in investment costs and profits, it maintains investment incentives. Norway's robust gas industry demonstrates that high taxes do not stifle growth, and Australia could see similar stability with a long-term commitment to the levy.
Other temporary or poorly designed levies might have negative effects, such as increasing prices or creating investment uncertainty. But a stable, permanent FSL would provide clarity and fairness, ensuring gas companies contribute their fair share without harming the economy.
In summary, as global crises drive up energy costs, the call for a fair share levy grows louder. With potential to boost revenue and support households, it represents a critical step toward ensuring Australia's natural resources benefit all its people, not just corporate interests.
