Simple reforms to the Petroleum Resources Rent Tax could raise $18 billion over the next four years, new Australia Institute research has found.
The report, A Stronger PRRT Cap, demonstrates that straightforward reforms would raise more revenue than the government's proposed 90% cap on the expenses oil and gas companies can deduct from their PRRT payments.
The research come as the Federal Government's Future Gas Strategy makes no mention at all of the PRRT - one of the main ways that the Australian Government collects tax from the gas industry.
Key Findings
- Revenue gains from Federal Government's proposed 90% cap will be effectively wiped out by inflation and a decline in PRRT tax receipts (by $2.4 billion) over the next four years
- An 80% cap would raise $13.42 billion over the next four years – $5.02 billion more than the current PRRT and $2.62 billion more than the Government's proposed cap
- A 60% cap would raise $18.60 billion over the next four years – $10.20 billion more than the current PRRT and $7.8 billion more than the Government's proposed cap
- Had the 60% cap been in place since 2016-17 it would have raised some $10.8bn more than was raised by the existing PRRT
- This extra revenue could fund the employment of up to 17,290 extra primary and secondary school teachers, 16,270 health care workers, 12,920 workers in residential care or 10,412 extra lecturers at university or technical and further educations colleges
"Budgets are a question of choices, and there are straightforward pathways for the government to reform the PRRT to ensure oil and gas companies pay a fairer return on their profits and deliver for all Australians," said Greg Jericho, Chief Economist at the Australia Institute.
"The PRRT collects less revenue than the government does through HECS repayments, and less than the tobacco or beer excises. Our analysis shows there are simple ways to address that.
"Even modest changes to the government's proposed 90% cap would generate over $18 billion over the forward estimates, revenue that can be put towards essential public services, affordable housing and renewable energy.
"The Government is choosing to double down on gas in its Future Gas Strategy - which makes no mention of the PRRT. Now is the time to ensure our tax system delivers a fair share of oil and gas profits for all Australians."
A Senate Inquiry examining the government's proposed PRRT changes is due to report on Friday.
