Australia’s fossil fuel and property industries are gearing up for a fight over tax as the government mulls changes ahead of its May budget.
Treasury is reportedly drawing up changes to make the tax system fairer for younger Australians, including by reducing the capital gains discount for property investors and increasing taxes on gas exporters.
The reports have been welcomed by crossbench members, who have been campaigning for the changes.
But the reception from big business is unsurprisingly more hostile.
Business Council chief executive Bran Black opposed increasing the petroleum resource rent tax (PRRT), even if it allowed for tax cuts to boost business investment elsewhere.
“We think it is the wrong approach to be looking at increasing taxes on businesses at this time,” he told reporters in Canberra on Monday.
The resources lobby, battle-hardened from its successful fight against the mining tax in 2013, came out swinging against any PRRT changes, which economists argue lets gas exporters off the hook with overly generous deductions.
As oil and gas prices soar and exporters stand to make massive windfall profits, Australian Energy Producers chief executive Samantha McCulloch said now would be the worst possible time to impose a new tax on the energy sector as it would stop investment in new supply.
Greens Senator Larissa Waters said it was natural for the gas industry to complain.
“Any big company will when their profits are at stake, but these greedy gas corporations are taking the piss,” she said.
Senator Waters joined calls from unions, other crossbenchers and left-leaning lobby group the Australia Institute for a 25 per cent tax on gas exports.
Independent MP Sophie Scamps said Australian voters had wised up since the Rudd-Gillard-Rudd years, citing an Australia Institute survey that found more than 60 per cent support for the levy.
International Energy Agency executive director Fatih Birol said Australians were the real owners of its resource endowment and it was important they get their fair share of the profits.
But Australia’s triple-A reputation for regulatory predictability would be threatened by abrupt changes to taxation, which would risk further investment in gas supply, he said.
Treasurer Jim Chalmers said the government believed Australians deserved a fair return from their natural resources, hence why it had changed the PRRT during the last term to make gas companies pay more tax sooner.
Meanwhile, developer lobby groups also railed against reported changes to property investor tax breaks.
Master Builders chief executive Denita Wawn and Property Council CEO Mike Zorbas said hiking taxes on property would reduce the supply of homes
“The end of the story is that current and future renters pay more, and it’s a tragedy when you reflect on the fact that the critical role of investors in these markets is absolutely essential to building, in particular, new apartments,” Mr Zorbas said.
A recent report by economists at Commonwealth Bank found cutting the capital gains tax discount from 50 to 25 per cent would make rental prices about 0.2 per cent higher over a decade, compared to no change.