APPEA defends PRRT

Malcolm Roberts defends PRRT

Malcolm Roberts defends PRRT

The Australian Petroleum Production and Exploration Association (APPEA) has hit back at recent comment made by the Greens and Sydney Morning Herald questioning the efficacy of the Petroleum Resource Rent Tax (PRRT).

Adam Bandt and the SMH had both made comments questioning whether the PRRT was best serving the Australian people – comments that APPEA chief executive Malcolm Roberts called “disingenuous” and “erroneous”.

Mr Bandt said in a statement on 18 November “You can only dig up our resources and sell them once and the Petroleum Resource Rent Tax was meant to make sure that Australians get some benefit from the companies bringing in huge profits.”

To which Dr Roberts replied “It’s disingenuous for The Greens to cry foul given the time expended to put a stop to natural resource production and therefore a stop resource taxes that flow to the Australian public.

“The Greens statement follows hot on the heels of a recent article in the Sydney Morning Herald of 17 November that makes a number of erroneous and incorrect statements about aspects of the PRRT regime.”

The SMH article in question used statistics from the Australian Tax Office that predict that the revenue from the PRRT will have increased by AU$0.2 billion from 2003-04 to 2019, when the industry is expected to reach peak production. The reasons for this is claimed to be too many loopholes available for tax planning, according to two unnamed university academics cited in the article.

The article also explains the PRRT in a way that Dr Roberts disagrees with. He said “Australia deserves better in terms of reporting about our tax system.”

Dr Roberts explained “A tax liability is incurred only after all costs associated with a project (including exploration and construction costs) have been recouped by a taxpayer. When these costs are recovered, a tax rate of 40 per cent is applied. This high tax rate reflects that it is a true rent based tax.”

He added “The PRRT has received bipartisan support for more than three decades, including in 2012, when it was extended to onshore petroleum activities. Indeed, it is a global benchmark for such taxes.
“There is a very good reason for that – it represents the sort of tax that has encouraged companies to invest the levels of capital for Australia to be a leader in the supply of gas to the world.”

The enabling legislation for the PRRT is the Petroleum Resource Rent Tax Assessment Act 1987 which was passed by parliament and made effective on 15 January 1988.

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