Japan – the world’s biggest importer of LNG – is set to collect more tax revenue from Australian gas than Australia will collect in PRRT from all LNG production. Australia is on the verge of being the world’s biggest exporter of LNG. Over the next 4 years Australian will collect zero in PRRT revenue from the five new offshore LNG projects and no direct royalties are paid.
This submission will focus on the offshore gas projects which are only subject to the PRRT. The submission will briefly examine the promises of government revenues, outline the key failures of the PRRT system and propose a new royalty regime to ensure that Australians receive some benefit for their natural resources, and that the oil and gas industry competes on a level playing field. While further economic modelling is underway, we believe that this proposal could generate $4 to $6 billion over the forward estimate.
Australia is already one of the top five LNG exporters, and set to overtake Qatar as the world's leading LNG exporter by 2021. However, it appears that Australians will miss out on the benefits of the boom, because its royalty regime has failed to keep up with global norms.
Chevron, one of California’s most profitable companies, and one of the world’s largest oil companies, pollutes California’s air and corrupts the State’s political process by spending hordes of cash to get what it wants from politicians.
The ITF is working with the Tax Justice Network Australia to expose the failure of the main oil and gas tax (PRRT) to collect any significant revenue, and the incredible lost opportunity to invest in the schools, hospitals and critical infrastructure we need for thriving communities in the coming decades.
By 2021, Australia's LNG export volumes are predicted to exceed those of Qatar, reaching 103.72 billion cubic metres (bcm) while Qatar's output falls to 101.7 bcm.
The Australian Government is expected to receive only AU $0.8 billion in PRRT revenues in 2019-20, or 1.97% of LNG export sales. At the same time, the Government of Qatar is forecast to collect AU $26.6 billion in royalties from LNG exports, equivalent to a share of 23.35%.
Chevron’s corporate structure in the UK should ring alarm bells about aggressive tax minimisation and may provide an example of how multinationals, particularly other oil companies, defraud the UK public.
The ITF is deeply concerned that corporate tax avoidance is depriving much-needed funds from schools, hospitals and other essential services. Our research suggests that Chevron’s aggressive tax planning may represent the largest tax avoidance scheme in Australia.
Despite the pending boom in liquefied natural gas (LNG) production and the forecast for Australia to be the largest LNG exporter in the world by 2020, the chief economist at Goldman Sach’s expects that “Australia’s LNG sector will deliver no additional PRRT revenues over the coming decade....”
As the world’s largest LNG project prepares to flow, billions of future tax revenues are at stake in Australia. Chevron’s complex business structure, involving subsidiaries in Bermuda, Singapore and Delaware, facilitates aggressive tax avoidance in Australia.