CANBERRA – The Australian government is weighing options to increase taxes on gas exports after a report on March 20, 2026 said the prime minister’s department had asked Treasury to model a flat 25% export levy on windfall profits alongside potential changes to the petroleum resource rent tax (PRRT) and corporate income tax. Gas companies say they will lobby against any move, while crossbenchers are urging the prime minister to redirect what they call “wartime profits” to households amid the global energy crisis.
The clash positions ministers, industry and a pivotal Senate crossbench for a high-stakes fight over who should capture a share of surging international gas prices following fresh disruptions in the Gulf. It also revives long-running questions about whether Australia, one of the world’s largest LNG exporters, is receiving an adequate public return for the exploitation of finite offshore resources under its existing petroleum tax regime.
Key dates shaping the debate
- February 2026: Escalation of the Israel-US war against Iran intensifies pressure on global energy markets, sending benchmark gas prices higher.
- March 18, 2026: Israel strikes Iranian facilities used to process gas from the South Pars field shared with Qatar, disrupting one of the world’s largest gas developments.
- March 19, 2026: Iran retaliates by attacking Qatar’s Ras Laffan gas hub, reportedly damaging facilities that produced 17% of the state-owned company’s LNG export capacity; QatarEnergy told Reuters repairs could take three to five years.
- March 20, 2026: A report says the prime minister’s department asked Treasury to model a 25% flat tax on gas exports and consider further PRRT and corporate tax changes, triggering an immediate backlash from producers.
What a 25% export levy would mean
A flat levy on windfall profits from exported gas would be imposed at the point of export and would be distinct from corporate income tax, which is assessed on overall company profits. In practice, such a levy would sit on top of existing obligations and apply when export prices exceed a defined benchmark, effectively capturing a larger share of upside for the Commonwealth budget during price spikes.
The PRRT, by contrast, is a longstanding profits-based impost on petroleum projects operating in Commonwealth waters. It is calculated after allowable deductions and is separate from state royalties and company tax. The framework is set out in the Petroleum Resource Rent Tax Assessment Act 1987, which has been repeatedly reviewed amid criticism that it delivers relatively modest revenue compared with the scale of gas exports.
Supporters say a windfall-style levy can raise revenue quickly when export prices spike, providing funds that can be channelled into cost-of-living relief, energy bill support or accelerated investment in renewables and transmission. Critics argue it could deter investment in new fields and expansions, push future projects to competitor jurisdictions and complicate supply planning for a fuel the government still counts on to support intermittent renewable power during the transition to net zero.
Industry warns of investment chill
The peak body Australian Energy Producers said a 25% levy would hit at “the worst possible time for Australia’s economy and energy security.” Chief executive Samantha McCulloch argued the measure would stall future supply, increase prices and threaten gas-reliant manufacturing.
“Imposing higher taxes on Australian gas producers would stop investment in new gas supply, leading to gas shortfalls, higher energy prices, and the closure of Australian industries that rely on reliable and affordable gas,” AEP’s chief executive officer Samantha McCulloch said.
The Chamber of Minerals and Energy WA described Australia’s reputation as a “stable, reliable place to invest,” warning the proposal risked “undermining that reputation and damaging the living standards of future generations of Australians.” Chief executive Aaron Morey said, “At exactly the moment we need more gas, not less, this would dramatically escalate sovereign risk.”
Industry groups are also privately warning that abrupt tax changes could complicate long-term LNG contracts with key trading partners in Asia, potentially encouraging buyers to diversify away from Australian supply.
Government signals caution but keeps options open
Resources Minister Madeleine King told parliament in March 2026 that steeper taxes “would discourage investment in the new supply we need to back up our transition to net zero,” adding, “We need gas as a firming capacity for renewables, whether they be solar or wind.”
Energy Minister Chris Bowen, asked about the 25% export levy on March 20, 2026, did not rule out consideration. “The treasurer’s made clear, the tax reform is on the government’s agenda, and is considering the way to maximise the efficient collection of tax in Australia,” he said on ABC radio.
Any change to the PRRT or the introduction of a new export levy would likely require legislation to pass the House of Representatives and Senate, leaving the government reliant on crossbench and Greens votes in the upper house. Officials are also weighing how a levy would interact with existing company tax arrangements and with Australia’s wider commitments to maintain a stable investment environment.
Crossbench and Greens intensify pressure
ACT senator David Pocock said it appeared the government “might finally be caving to the pressure myself, others on the crossbench and especially Australians in communities across the country have been putting on them to tax gas companies making wartime profits.”
Pocock also said, “Australians are already paying more on petrol and we shouldn’t be paying more on beer excise than the government gets for petroleum resource rent tax.” His comments underscore a broader frustration among some senators that revenue from the PRRT has lagged behind other “sin taxes” despite record export volumes.
The Greens leader, Larissa Waters, wrote to the prime minister on March 19, 2026 offering support to pass a bill in the upcoming sitting fortnight, arguing the revenue could be dedicated to “urgent cost of living relief.” “Millions of Australians are doing it tough, and these rich corporations should not get a free ride while people are going backwards,” she said.
Opposition finance lead Tim Wilson rejected the idea, saying it would be “next-level denial to think the answer to a fuel and energy crisis is added new taxes because it will just freeze investment and private jobs growth.” The Coalition has instead pressed the government to focus on streamlining project approvals and expanding domestic supply.
Revenue comparisons in focus
According to the mid-year economic and financial outlook for 2025-26:
- Tobacco excise: A$5.45 billion (forecast)
- Spirits excise: A$3.4 billion (forecast)
- Beer excise: A$2.7 billion (forecast)
- PRRT: A$1.5 billion (forecast)
Budget analysts say those numbers highlight the relatively small forecast take from the PRRT compared with other, narrower revenue bases. A separate analysis by the Australia Institute estimated Australia would have received about A$17 billion a year in revenue from gas producers since 2022, based on pre-war conditions, if a 25% export tax had been in place.
While such estimates are contested by industry, they are being cited by crossbench and Greens MPs to argue that a targeted levy could materially change the Commonwealth’s fiscal position and create room for further relief measures without broad-based tax hikes.
Global shocks tighten gas market
The price of gas has already risen internationally after the strikes on March 18-19, 2026 in and around facilities linked to the South Pars field and Qatar’s Ras Laffan hub. Australian exporters are expected to benefit from stronger demand and constrained supply if the disruption persists, reinforcing the perception in Canberra that producers are again enjoying windfall gains driven by geopolitical conflict rather than new investment.
At the same time, higher global prices are feeding into domestic energy bills and transport costs, intensifying political pressure on the government to show it is using every available lever – including the tax system – to shield households and small businesses.
As of March 21, 2026, ministers have not announced a decision on any new levy or PRRT change; the energy minister said on March 20 that tax reform is on the agenda and under consideration. Any proposal that emerges from Treasury’s modelling will test the Albanese government’s ability to balance energy security, investor confidence and demands from voters that “wartime profits” be shared more broadly.
