Senate inquiry into corporate tax avoidance: Australia’s offshore oil and gas industry
28 August 2017, by Diane Kraal
The Senate inquiry into Corporate Tax Avoidance has recently held hearings in relation to Australia’s offshore oil and gas industry and Monday 3 July 2017 was the second of three hearings on this topic. The Senate inquiry was extended late last year to include a consideration of the Petroleum Resource Rent Tax (PRRT) for offshore oil and gas, and was the response by the Australian Labor Party and Australian Greens to the Turnbull Government’s announcement of a review into the PRRT. I have been researching for some time into the history and operation of Australia’s Petroleum Resource Rent Tax (PRRT) and subsequently made a submission to the Senate Inquiry. I was asked to appear at that Monday’s hearing as an expert witness and explain my perspective (watch video here). The senators conducting that hearing were Jane Hume (Lib., Acting Chair), Sam Dastyari (ALP), Senator Jenny McAllister (ALP) and Senator Peter Whish-Wilson (Greens).
Other witnesses on the day included Michael Callaghan, Chair of the PRRT Review; the Australian Petroleum Production and Exploration Association (APPEA); the community groups, Tax Justice Network and Publish What You Pay; Santos, the Australian Taxation Office and the Department of Industry, Innovation and Science. The mix of witnesses and points of view promoted some Senators to ask: ‘If Australia is poised to become the world’s largest exporter of gas, then why are there domestic gas shortages – and at higher prices than those to export customers?’; ‘Is industry arguing that PRRT concessions should stay in place to provide the incentive to extract more gas to satisfy domestic market demand?’
A key point that I made before the Senate Inquiry was how the PRRT Regulations allow the gross undervaluing of the gas transfer price of the PRRT, to the detriment of tax collections and the community as owners of petroleum resources, which is consistent to my previous commentary on the shortcomings in the gas transfer price method prescribed by the PPRT Regulations. Indeed, the Callaghan “Final PRRT Final Report”, acknowledges the flaws of the PRRT gas transfer price method.
Read the full article at Austaxpolicy blog.