Australian Treasurer urges parliament to back petroleum tax changes

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SYDNEY – Australian Chancellor of the Exchequer Jim Chalmers on Sunday urged minor political parties to support proposed changes to the Petroleum Resource Rent Tax (PRRT) paid by the offshore LNG industry, as the industry lobby group welcomed the move.

The government estimates the changes, which will increase taxes paid by the industry, will raise revenues by A$2.4 billion ($1.6 billion) over the next four financial years.

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It comes as Australia, which has 10 LNG plants operated by companies including Woodside, Chevron Corp, Santos Ltd, Japan’s Inpex Corp, ConocoPhillips and Shell, competes with Qatar and the United States as the world’s largest supplier of LNG.

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Asked about possible opposition to the changes in P&R from junior senators, Chalmers told Sky News: “I encourage Parliament to support that.”

A Labor government will need the support of smaller parties in the Senate, where they are in a minority, to push through reform.

Speaking ahead of the release of the 2023/24 federal budget on Tuesday, Chalmers said the changes are balanced in getting “more revenue sooner to fund our cost-of-living package” while protecting “investment, supply and our international relationships”.

Under the changes, the government will adopt most of the recommendations of the Treasury review – initiated by the previous Conservative government – of gas transfer pricing rules, including limiting the amount of PRRT rateable income on LNG projects that can be offset by rebates to 90%, from July 1. . .

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It also plans to achieve parity in the processing of the default upstream and upstream entities so that losses are divided equally rather than those that are attributed entirely to the upstream entity.

The Australian gas industry lobby, the Australian Petroleum Production and Exploration Association, said in a statement that the proposals represented the “undeniable need” for a strong gas sector and a “more sustainable national budget”.

However, the chief executive of Woodside Energy Group last month urged the government not to change the tax, saying “overreach” on tax reform could undermine future revenue and hinder the investment needed to boost supply.

A Woodside spokesperson was not immediately available to comment on the proposed changes announced Saturday. (Reporting by Sam McKeith; Editing by Raju Gopalakrishnan)