RE: Update just out from tamboran15 Apr 2026 15:15
Sorry for the typos. Hard with a phone. While the HC board is proffering its own tilt in the export tax debate, I thought I would post what I understands thus far. The current tax in place is called the Petroleum Resource Rent Tax (PRRT). It’s a profit based tax and not a production/export tax. Super profits are taxed at a 40% rate. The problems is, there are deductions a company can make for exploration costs, development costs, and operating costs. The costs can be “up lifted” annually so basically a million dollar in costs ten years ago becomes a two million dollar deductions today. So a project can take decades before paying a PRRT tax. Thus those upset say too little tax is collected. It allows companies to delay paying tax for too long. Companies can forward losses for many years. The uplift idea was designed to encourage risky investments but opposition says it’s too mature for generous deductions now.
On the other side of the argument, companies argue that without generous deductions projects will not happen and investors will go elsewhere where investment is encouraged. PRRT is designed to pay more once projects become highly profitable.
A flat tax or windfall tax would generate revenue immediately and be tied to high prices and not long term profits. At the moment, with high prices, the accusation is these companies are racking up record profits which they can avoid paying taxes on by claiming past deductions that have grown over time based on the current PRRT formula.
To be clear, an export tax would focus on volume or value. A windfall tax would focus on excess pricing like during a price spike. Basically, the question is should Australia have a system that promotes long term investment or move to something that captures revenue now. But that might be a little easy of an explanation.
So let’s assume the uplift rate is 10% under the current model (I could not figure out what it is exactly). But if a new company spends 20 billion in construction costs and 5 billion in exploration costs it will have a total starting costs of 25 billion. After ten years, that 25 billion can become 60 billion in deductions.
Let’s say annual profits after all is said and done is 7 billion. Part of the 60 billion can be used to write off the profit resulting in 0 taxable profit for years.
The reality is in this current environment where Australia is short on energy and cost of living/energy is very high, most people are very upset and feel like these companies are getting away without paying their fair share. Both sides appear to me to be correct.
Other countries have even higher taxes but have done this through partial state ownership of some of the projects and continue to see investment. However, there is a lot of reasons why it might work in those countries and not work in Australia unless there is a major reform. Norway is an example being thrown around in the debate right now but I think it
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