PNG gas tax plugged
Experts say Australia should take PNG’s lead on gas taxing arrangements.
In Australia, large gas-to-liquefied natural gas (LNG) projects pay a resource rent tax (which is levied on above-normal profits), on top of the regular company tax.
But these projects often take years to make any ‘above-normal’ profits, if at all, leading to a lack of resource tax revenue.
In Australia, this resource rent tax has replaced royalties for many LNG projects.
From next year, resources companies operating in PNG will be subject to a new resource rent tax, as well as existing royalties and company taxes.
Diane Kraal, a senior lecturer in the Business Law and Taxation Department of Monash Business School at Monash University, says Australia is missing out.
“A re-introduction of some level of royalties would not increase the tax burden for industry, but would more immediately provide much-needed revenue for government,” Dr Kraal wrote in an article for The Conversation.
“All countries with petroleum resources levy additional resource taxes, which result in industry paying high taxes.
“For example, look at Norway and the United Kingdom. In both those countries, the accepted justification for additional resource taxes on petroleum is due to the finiteness of mineral resources: extraction can only occur once.”
She argues that Australia's petroleum resource rent tax (PRRT) should be reformed to pick up missed royalties.