Gas Levy: Australia Weighs Tax on ‘Wartime Profits’ as Industry Fights Back
Canberra – The Australian federal government is weighing a potential 25% export levy on gas giants as global energy markets reel from escalating tensions in the Middle East, following attacks on key gas infrastructure in Iran and Qatar. The move comes as crossbench senators demand the government capture “wartime profits” from gas exporters amid rising domestic energy costs.
The Prime Minister’s department has tasked Treasury with modelling the financial impact of the proposed tax, according to reports, alongside potential adjustments to the Petroleum Resource Rent Tax (PRRT) and corporate income tax. The escalating crisis, triggered by attacks on gas facilities, has already driven up international gas prices, positioning Australian exporters to benefit from increased demand and constrained supply.
Independent Senator David Pocock, a key voice pressuring the government, stated on Friday that the government “might finally be caving to the pressure” to tax the industry’s windfall gains. “Australians are already paying more on petrol and we shouldn’t be paying more on beer excise than the government gets for petroleum resource rent tax,” Pocock said.
The Australia Institute estimates that a 25% tax on gas exports could have generated approximately $17 billion annually for Australia since 2022, based on pre-war price levels. Greens leader Larissa Waters has offered her party’s support to pass legislation implementing the tax, proposing the revenue be directed towards cost-of-living relief.
However, the gas industry is vehemently opposing the proposed levy. Australian Energy Producers (AEP) CEO Samantha McCulloch warned that the tax would arrive at “the worst possible time for Australia’s economy and energy security,” arguing it would discourage investment in new gas supply, leading to shortages and higher prices. Resources Minister Madeleine King has previously cautioned that increased taxes would “discourage investment in the new supply we need to back up our transition to net zero.”
Energy Minister Chris Bowen did not rule out consideration of the tax when questioned on Friday, stating that the Treasurer had affirmed tax reform was on the government’s agenda and that maximizing efficient tax collection was being considered.
The recent attacks in the Gulf have significantly disrupted energy markets. On Wednesday, Israel struck Iranian facilities processing gas from the South Pars field, shared with Qatar. Iran retaliated on Thursday by attacking the Ras Laffan gas hub in Qatar, reportedly damaging facilities responsible for 17% of QatarEnergy’s LNG export capacity, with repairs expected to accept three to five years, according to Reuters.
The opposition has likewise weighed in, with Shadow Treasurer Tim Wilson arguing that additional taxes would “freeze investment and private jobs growth.” The Chamber of Minerals and Energy WA expressed concern that the tax could undermine Australia’s reputation as a stable investment destination, potentially jeopardizing future gas supply.