Rod Sims slams Jim “Chicken” Chalmers today for his frightened little gas tax.
Sims makes the point that for at least two reasons, a tougher stance may have been adopted. First, the current PRRT regime was widely acknowledged to be badly broken, thus industry had to anticipate major change. Second, the budget is in severe structural deficit, and if relatively simple opportunities to boost revenue are not taken, the focus will shift to the budget’s expenditure side.
He goes on to describe how a resource rent tax is frequently levied on industries where firms extract finite resources such as oil, gas, and minerals that belong to citizens at large; they are not assets developed by the extracting company itself. Such businesses pay corporation tax and then pay an additional level of taxation if and only if their returns reach a specific size.
Economic rent is income that exceeds the amount required to attract the economically optimal level of investment into an activity. Such rents, or excess returns, frequently accrue in extractive businesses that experience very high prices on a regular basis, as has happened with gas as a result of the Ukraine war. Many countries across the world levy resource rent taxes in order to share the advantages of these high returns with the people who possess these resources.
And the coup de grace:
“The government’s changes bring in $7bn over 10 years at current oil prices; the (I think) modest changes I suggested last year would have bought in triple that, in broad terms.”
But, surely the greatest condemnation of the frightened little tax is that the cartel itself is so damn happy with it:
“This rounds out these reviews, and we expect now to have stability and certainty regarding these taxation settings,” said APPEA chief executive Samantha McCulloch.
Ms McCulloch urged the opposition to back the change, rather than force Labor to deal in the Senate with the Greens and independents who feel the revenue to be inadequate…
It is woefully inadequate and another black mark for a treasurer that so greatly admires bold reforms but never has the courage to do them himself.
