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Australia takes aim at oil and gas industry in tax review
[MELBOURNE] Australia is targeting the oil and gas industry for a tax review ahead of next year's budget, in a push to boost revenue after a sharp slump over the past three years and collect more from multinational giants.
Treasurer Scott Morrison said on Wednesday that collections from the nation's petroleum resource rent tax had halved to US$800 million since 2013, while revenue from crude oil excise taxes had more than halved due to a collapse in oil and gas prices and falling output.
"This is about ensuring sustainability and effectiveness and efficiency of our tax system. It is actually not primarily about revenue. It is important these companies pay their fair share when it comes to these issues," Treasurer Scott Morrison told reporters.
The drive comes at a difficult time for the petroleum industry in Australia, as companies hit by the price slump have slashed exploration spending and shelved plans for new liquefied natural gas projects, which will hit tax takings down the track.
Canberra has already been tackling multinationals over clever accounting and setting up of trading operations offshore to lower their tax exposure in Australia, and Morrison said the oil and gas focus is part of that effort.
Australia last targeted the resources industry in 2010, when then Labor Prime Minister Kevin Rudd proposed a mining super profits tax at the height of the mining boom. A campaign against the proposal funded by miners and spirited political opposition heavily watered down the proposal and contributed to Mr Rudd's downfall.
The oil and gas tax review follows a recent audit, which found that Australia's biggest petroleum operation, the North West Shelf joint venture, whose owners include Chevron Corp and Royal Dutch Shell, may have underpaid royalties by taking ineligible deductions.
Mr Morrison said deduction calculations will be examined as part of the review.
He has already had preliminary discussions with the oil and gas industry and companies like Woodside Petroleum, Australia's biggest independent oil and gas producer, and said they were willing to work on the issues.
Woodside said it would cooperate fully with the review, in stark contrast to the mining industry's response in 2010. "The oil and gas industry is under significant financial pressure from low commodity prices, therefore stability in tax arrangements is essential for our shareholders to support investment in uncertain business environments," Woodside said in an emailed statement.
The Australian Petroleum Production and Exploration Association called the tax review timely and said the industry had paid more than US$5 billion in taxes in the 2015 fiscal year, despite recording its first ever net loss.
"The continued payment of taxes at a time when the industry is under severe pressure debunks critics' suggestions that the industry is not somehow paying its way," Appea chief executive Malcolm Roberts said in a statement.
Mr Morrison said he did not want an updated tax system to kill off new investment.
Oil and gas company shares fell on Wednesday in tandem with oil prices, as Opec looked like it would fail to reach an agreement to cut production. Woodside was down 2 per cent, Santos fell 1 per cent and Beach Energy dropped 3.3 per cent.