Review of Australia's Petroleum Resource Rent Tax: Implications from a Case Study of the Gorgon Gas Project

Kraal, Diane

doi:10.1177/0067205x1704500207

Cited by 9 publications

(4 citation statements)

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“…10 It would be possible for New South Wales (the other coal exporting state) to do similar. Other options include the federal government seeking to reform the PRRT to boost its revenue collections, for example via further reducing the available uplift rate and increasing the tax rate (Kraal, 2017).…”

Section: Carbon Pricing and Fossil Fuel Taxesmentioning

confidence: 99%

“…Lessons can be learned from Australia's experience with the LNG export sector, where benefit sharing has been lacking for reasons including weaknesses in the design of the federal petroleum resource rent tax (PRRT; Kraal, 2017). The east coast of Australia has been exposed to a large increase in natural gas prices as a result of the opening of the east coast LNG export sector, but the increment to government revenues has been relatively minor (D'Cruz & Holden, 2017).…”

Section: Introductionmentioning

confidence: 99%

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On the way out: Government revenues from fossil fuels in Australia

Burke

2023

Aus J Agri & Res Econ

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Australia is moving from a fossil fuel-dominated energy mix to one that is increasingly powered by solar and wind. Fossil fuel exports are also likely to decline given their poor compatibility with the net zero emission targets of key trading partners. There is the potential for a variety of new exports of zero carbon energy and products to emerge. This paper reviews implications of the ongoing energy transition for government revenues from fossil fuel extraction and use and discusses policy options in response. It concludes that the transition heightens the need for efficient government revenue-raising mechanisms across the economy. Among the possible reforms, this paper reviews the potential for Australia's corporate income tax to be reoriented towards the taxation of above-normal profits via an allowance for corporate equity approach. Other revenue-raising options that are discussed include carbon pricing, electronic road user pricing, wider use of progressive royalties, the use of industry levies as applied in Australia's agricultural sector, and the generation of revenue from government co-investments.

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Section: Carbon Pricing and Fossil Fuel Taxesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

On the way out: Government revenues from fossil fuels in Australia

Burke

2023

Aus J Agri & Res Econ

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“…The reason that is justifying the tax is that the companies exploiting a commonwealth asset such as gas (via offshore platform) should pay a fair share of their revenue to the government beyond the corporation tax that they are already liable to due to the monopoly situation that characterize the specific business sector and the limited nature of the resource. Such a share is currently equal to 40% (Kraal 2017).…”

Section: The Australian Perspective On Superprofit Taxation and The D...mentioning

confidence: 99%

Windfall Profit Taxation in Europe (and Beyond)

Greggi,

Miotto

2023

Laws

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In 2022, the European Commission introduced, for the first time in its history, a windfall profit tax to be applied on “excessive” profits realized by qualified businesses operating in the “Oil and Gas” sector. Immediately after its implementation, questions arose as to its sustainability and its consistency with constitutional principles of the different member states regulating the domestic power to tax. To assess the consistency with the aforesaid rules, the article samples two countries, inside and outside the EU (Italy and Australia, respectively), and the historical precedents of the matter. Italy has been chosen due to the particularly stringent set of principles regulating the power of the legislature to tax, and Australia has been chosen because of the long-standing experience with superprofit taxes. In most of the scenarios analyzed, one common feature emerged: the complexity in defining the “Extra” nature of the profits and, consequently, the uncertainties in the calculation of the taxable base. In the case of Italy, for instance, the legislator had to intervene in several different moments to fine-tune the taxable base and restore certainty to the tax system. As a conclusion, while the taxation of extra profits should not per se be disregarded, its implementation demands a more robust and precise legal framework together with the understanding that the introduction of such a levy would be a one-way journey for the tax systems: windfall profits taxes would be here to stay.

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“…Government take for Canada, the United States, and Australia are 58.36%, 72.74%, and 43.92% respectively, and their royalties are 27.5, 20%, and 6.25% respectively; while tax rates are 15%, 35%, and 30% (Phillips, 2008). Literature has shown that Australian petroleum fiscal policy is more attractive (Kraal, 2017;Swe and Emodi, 2018). Australia allows for accelerated depreciation, immediate write off of exploration expenditure, research and development (R&D) incentive, and expenditure uplift.…”

Section: Fiscal Regime Elementsmentioning

confidence: 99%

Impact of Production Sharing Contract Price Sliding Royalty: The Case of Nigeria’s Deepwater Operation

Okoro

Okoye²,

Okafor³

et al. 2021

IJEEP

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Petroleum fiscal regime has been a controversial issue in Nigerian economy. The basic issue is which regime will lead to the greatest benefit to the government without negatively affecting the performance of the international oil companies. Nigeria has in the past used different regime and had adopted the current price sliding royalty regime in 1996. The aim of this study is to examine how the new price sliding royalty affects the stake of government and contractors. This study adopts ex-post research design approach using data from various sources between 1980 and 2019. The autoregressive distributed lag (ARDL) regression approach was adopted for the data analysis. The unit root results reveal that the time series data consists of a mix of I(1) and I(0) variables. The ARDL bound cointegration test shows that all the variables specified in the models have long run relationship. Estimates from the models indicate that the royalty regime in the Deep Offshore and Inland Basin Production Sharing Contract has positive and significant impact on the stake of government in the long and short runs, but negative impact on the stake of contractors. Furthermore, the royalty regime has negative impact on contractors' performance in the long run. However, the impact on the three fiscal indicators (oil revenue, government expenditure, and deficit-GDP ratio) is positive. The study therefore recommends the repeal of the Nigerian petroleum fiscal policy with the new price sliding royalty to encourage investment and development of the petroleum sector.

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Review of Australia's Petroleum Resource Rent Tax: Implications from a Case Study of the Gorgon Gas Project

Cited by 9 publications

References 1 publication

On the way out: Government revenues from fossil fuels in Australia

On the way out: Government revenues from fossil fuels in Australia

Windfall Profit Taxation in Europe (and Beyond)

Impact of Production Sharing Contract Price Sliding Royalty: The Case of Nigeria’s Deepwater Operation

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