The Australian government is considering a windfall tax on gas companies amid surging energy prices triggered by the Middle East conflict. Energy Minister Chris Bowen has not ruled out new taxes on resource companies in the upcoming federal budget, stating that any decisions rest with Treasurer Jim Chalmers.
The prime minister's department has asked Treasury to model new levy options, including reforms to the petroleum resources rent tax (PRRT) and corporate income tax, according to ABC News. Recent Israeli strikes on Iran's South Pars gas field and retaliatory attacks on Qatar's LNG plant have driven LNG prices to their highest since 2022.
The Greens have proposed a 25% levy on gas exports, while the Australian Conservation Foundation has called for a 25% windfall profits tax. Independent MP Allegra Spender has urged a 50% tax on windfall profits, arguing it would not discourage investment.
However, Australian Energy Producers chief Samantha McCulloch warned that higher taxes would disincentivise investment and lead to higher energy prices. She noted that gas companies paid $21.9 billion in taxes and royalties in 2024/25.
The PRRT, designed to capture above-normal profits, has raised only $1.4 billion annually between 2019 and 2015 due to generous deductions. Former competition watchdog chair Rod Sims has proposed a 40% levy on cashflow, which could raise $27 billion per year if prices reach past peaks.
