End to miner tax loophole could net $322b

Australia’s budget woes driven by the COVID-19 pandemic could be eased by closing tax loopholes and ending fossil fuel rebates, a new report says.

Research group Climate Energy Finance estimates Australia’s coffers could be boosted by $322 billion over the next decade under its proposed changes.

These include multinational tax reform, ending the diesel fuel rebate and boosting coal, gas and oil royalties.

The reforms could put nearly $54 billion back into the federal budget, which is currently in deficit, this financial year alone.

Climate Energy Finance director Tim Buckley said the tax avoidance measures used by companies extracting fossil fuels in Australia were “perverse”.

“It beggars belief that the companies who say they are the backbone of Australia’s budget revenue cry wolf to secure handouts,” he said on Wednesday.

“With Australia’s record debt there is no better time for the government to rein in these loopholes and ensure foreign companies start to pay their corporate tax and limit their accounting tricks.”

Australia’s resources sector is enjoying record profits, riding a wave of demand brought on by the COVID-19 pandemic and more recently the war in Ukraine.

Tax office data shows the top 20 fossil fuel multinationals operating in Australia paid only $1.3 billion in tax from a $113 billion profit pool in 2021/22.

The federal government has already flagged clamping down on multinational tax avoidance but ending rebates and boosting royalties for the sector have remained off the table.

Closing loopholes could generate nearly $10 billion in 2022/23, Climate Energy Finance estimates, and nearly $110 billion over the next 10 years.

Diesel fuel rebates allow companies to claim tax credits for their fuel bills on large vehicles – a tax break coveted by the mining and farming sectors.

Ending the rebate could generate nearly $50 billion over the next decade.

The federal Greens have called for an end to the rebate for the mining sector while allowing farmers to continue to claim it.

Boosting royalties on coal and gas projects in NSW and Queensland, as well as onshore and offshore petroleum projects, could net more than $163 billion in revenue over the decade, including more than $41 billion this financial year, Climate Energy Finance said.