LNG ripping Australia off $90bn in taxes

Via Domainfax:

An Oxford University expert says Australia would be $90 billion better off if it adopted European-style resource tax policies and argues the Turnbull government has given up on collecting a meaningful amount of revenue from some of its most valuable resources.

In one of a suite of new submissions to a Senate inquiry, Oxford Institute for Energy Studies academic Juan Carlos Boué warned unless Australia “radically overhauled its fiscal regime” it would have the second lowest share of government revenue from oil and gas in the world.

Australia is on track to eclipse Qatar as the largest exporter of gas by 2020, but is expected to only earn $600 million in 2018 – the same amount of revenue the government earns in beer tax every year – compared to Qatar’s $26.6 billion.

Calling the result “a silver medal finish that no Australian should desire,” Mr Carlos Boué, a former industry consultant, found Australia had an effective tax ratio of 21 per cent on gas resources, falling below the 35 per cent or more taken by the North Sea nations of Denmark, the Netherlands, Norway and Germany.

There are no taxes because there are no profits. The exports are all loss-making on an all-in cost basis. That leaves huge depreciation, write downs and carry forwards compounded by rent tax uplift rates to ensure no taxes are ever paid.

The broader inventory on the cartel is stark:

  • profitless exports;
  • leading to artificial shortages and discriminatory pricing at home;
  • with no tax take and little in royalties, and
  • the complete derailing of the Australia’s planned decarbonisation.

In short, all Aussie households and business are paying the gas cartel to take our gas away, plus to wreck our contribution to fighting climate change.

It’s not just highway robbery. It’s beyond belief.

David Llewellyn-Smith
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Comments

  1. This is how Alaska funds its UBI. It simply puts an export tax on hydrocarbons and uses it to give U$2000/year to each poor voter in Alaska.

    The braindead Christine Milne talked about having a coal export tax but was most likely never going to use it to give me a $20 cheque – let alone a U$2000/year one.

    Inequality is growing is it not?

  2. ceteris paribus

    Yes, it is “beyond belief”. So what is the real explanation and who is in on it? PS. You have probably explAined before but I have not followed the bent banana story.

      • All you need to know, is that the author of that sensationalist piece From 2005 to 2009, he was special advisor to the Venezuelan minister of Energy and Petroleum and sat on the boards of most of Petróleos de Venezuela’s (PDVSA) refining ventures abroad. (https://www.oxfordenergy.org/authors/juan-carlos-boue/)

        Why does MB always promote these socialist wackos as legitimate commentators??? How many times do they have to be the Grattan Institutes mouth piece, or quote some weird speculator, claiming we are all going to die!!! his argument is beyond dumb.

        BHP?RIO doing marketing out of Singapore, sure ping that, and chase it up; but the above is pure ignorant diatribe.

      • If “socialist” means taxing CO2-spewing resources for the good of Australians, I’m a socialist too!

      • It has significance. Boué’s background and associations with failed resource States does not auger well.

        Importantly, the SMH article is light on evidentiary support and appears to merely project the journalist’s personal views. SMH should do better. Gargantuan claims require detailed support and SMH has failed to deliver.

  3. What are “European-style resource tax policies”? Perhaps SMH could provide a detailed explanation and link to the paper concerned. Perhaps SMH could provide calculations to support claims in the article

    Juan Carlos Boué also served as Special Advisor to the Minister of Popular Power for Energy and Petroleum and the President of Petróleos de Venezuela. Everyone has a bad day,

  4. Kormanator_T800

    the Turnbull government has given up on collecting a meaningful amount of revenue from some of its most valuable resources.

    Perhaps the gas cartel don’t pay tax, but they do have to pay lobbyists and make big donations to the Liberals.

    It is Win-Win for liberals and the gas companies. Not do much “win” for the rest of Australia.

  5. Meaningful resource rent taxes were proposed in the Henry Review. Emasculated by lobbyists and interference in domestic elections.

    Worse, the benefits of Australia’s failure to collect some of the gains of resource extraction accrue 80/20 to foreign shareholders and are spent in other countries. We are soooo stupid.