Oil and gas companies must pay a fair share of windfall profits: Rod Sims

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Treasurer Jim Chalmers says his October budget will be the start of a conversation about tax reform.Credit:Alex Ellinghausen

“Australians recognize that multinationals need to pay a fairer share of tax in the countries where they make their profits and that’s how we fund the services Australians rely on,” he told Sky News. .

Samantha McCulloch, chief executive of the Australian Petroleum Production & Exploration Association, said industry tax and royalty figures proved the current tax settings had “direct financial value to the Australian economy and public” and that the sector helped finance public roads, schools and hospitals.

The peak body was unable to say what proportion of revenue the $14 billion represented.

Sims said tax rules for the oil and gas sector were “far too generous” and companies had been allowed to get away with paying fairly low taxes.

“These are huge projects that they are facing, so of course the dollars are going to be important – but it is the tax rate that is essential and the return they are getting, especially at this time when they are making very large amounts of money,” Sims said.

Last week, the European Union agreed to hit energy companies with a windfall profit levy that aims to raise 140 billion euros ($214.5 billion) for member countries.

United Nations Secretary-General Antonio Guterres urged governments in August to tax excessive oil and gas profits, saying it was “immoral” for companies to make record profits from the energy crisis “on the back of the poorest people and communities”.

Chalmers said his October budget would contain “the beginnings of our multinational tax policy”, but he did not expect overall Commonwealth tax revenue to exceed 23.9% of GDP, the ceiling for the Coalition, although figures are still being finalized.

“I see that cap is largely an abstract thing that was ripped out of thin air by our predecessors,” the treasurer said.

“We’re ready to make the right responsible decisions to make sure we’re doing the right thing for people and their economy.”

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The Australia Institute published research in May showing that the country’s oil and gas exporters were almost exclusively foreign-owned and included large companies that paid no income tax for seven years during a period when they achieved a turnover of more than 138 billion dollars.

Energy giant Chevron revealed last month that it was preparing for a 25-fold increase in its Australian tax bill this year to around $3.7 billion after finally exhausting all its tax deductions, even thinking that its LNG businesses in Western Australia were years away from paying for the oil resource. rental tax.

McCulloch said the industry has invested more than $300 billion in “large, complex and capital-intensive” LNG projects since 2010 and that focusing solely on revenue “ignores our much broader role – employing 165,000 people along the supply chain, building infrastructure, powering homes and businesses, and facilitating growth.”

But Sims said the oil and gas sector generates “huge revenues with very few jobs” compared to other industries.

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