Australian treasurer urges parliament to support petrol tax change

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SYDNEY — Australian Treasurer Jim Chalmers urged minor political parties on Sunday to support proposed changes to the Petroleum Resource Lease Tax (PRRT) paid for by the offshore LNG industry, as the lobbying group acts Industry lobbies welcomed the move.

The government estimates the changes, which will increase taxes paid by the industry, will lift revenue 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 US for home leading global LNG supplier.

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When asked about the possibility of opposition to the PRRT changes from minor party senators, Chalmers told Sky News: “I encourage parliament to support this.”

The Labor government will need the support of small parties in the Senate, where it is in the minority, to push reforms through.

Speaking ahead of the 2023/24 federal budget announcement on Tuesday, Chalmers said the changes strike a balance between getting “more revenue sooner to fund our cost of living package.” ” while protecting “our investment, supply and international relationships”.

Under the changes, the government will adopt most of the Treasury’s review recommendations – initiated by the former conservative government – on gas transfer pricing rules, including income cap PRRT taxable for LNG projects can be offset by deductions down to 90%, effective July 1st.

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It also plans to balance the treatment of nominal upstream and downstream entities, so the loss will be shared equally rather than entirely by the upstream entity.

Australia’s gas industry lobbying group, the Australian Petroleum Exploration and Production Association, said in a statement that the proposals account for “undeniable demand” for the strong gas industry and “more sustainable national budgets”.

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

A Woodside spokesman had no immediate comment on the proposed changes announced on Saturday. (Reporting by Sam McKeith; Editing by Raju Gopalakrishnan)