Labor's Proposed 25% Tax on Gas Exports: What It Could Pay For 2026

The Labor party's proposed 25% tax on gas exports aims to ensure Australians receive a fair return from natural resources, addressing a loophole that has allowed LNG giants like Inpex to pay little to no tax. With Australia exporting $52.6 billion more LNG than 25 years ago yet collecting $979 million less in petroleum resource rent tax (PRRT), the reform could fund critical public services. Currently, Australia is the world's second-largest LNG exporter, but the complex PRRT system lets companies offset costs indefinitely, leaving the government with dwindling revenue.

How the PRRT Has Failed Australians

The petroleum resource rent tax was designed in the 1980s to tax oil and gas profits, but it has not kept pace with the LNG boom. While LNG exports soared from 2% to 12% of all goods exported, PRRT revenue dropped 41% in real terms. Much of the problem lies with offshore gas fields, which are royalty-free, and accounting methods that allow companies to deduct massive exploration and development costs. As a result, Japanese giant Inpex, cited by the prime minister as a PRRT success story, has paid zero royalties and zero PRRT despite exporting $195 billion worth of LNG.

What a 25% Tax on Gas Exports Could Fund

Implementing a straightforward 25% levy on LNG export revenues—as proposed by the ACTU—could generate billions annually. Below is a comparison of current revenue versus potential revenue from a 25% export tax:

Key Takeaways

• The PRRT system is broken—companies like Inpex escape taxation despite billions in exports.
• A flat 25% export tax would simplify revenue collection and close loopholes.
• Funds could be redirected to healthcare, education, clean energy, and regional development.
• Australia risks losing its reputation as a reliable energy partner if reforms are not balanced.

Comparing Australia's Tax Regime to Other LNG Exporters

Other major LNG exporters impose higher effective tax rates. For instance, Qatar and the United States capture a larger share of profits through royalties and production-sharing agreements. Australia's unique PRRT model, with its generous cost deductions, has been criticized by economists as a giveaway to multinational corporations. A 25% export tax would align Australia more closely with global norms.

Potential Challenges and Opposition

The gas industry argues that higher taxes could deter investment and reduce competitiveness. However, the ACTU and many Labor MPs counter that the current system has already failed to deliver fair returns. The ALP national conference vote on Thursday will test internal support for this reform. If passed, it could become a key election platform.

FAQ

As the ALP national conference approaches, the debate over taxing gas exports intensifies. A 25% tax on gas exports could reshape Australia's resource taxation, delivering billions for public goods while ensuring multinationals pay their fair share. Whether the party unites behind this reform remains to be seen, but the pressure is clearly mounting.