Why a 25% LNG export tax would backfire
Australia deserves a fair return from gas, but PRRT reform would do more than a blunt export tax to protect supply and investment.
The renewed push for a flat 25% LNG export tax may be emotionally appealing, but it is economically misguided and strategically risky.
The prime minister has confirmed he won’t pursue one in the 2026 budget. Still, Australians are entitled to ask whether we are getting a fair return from our gas resources. But the way that question is answered matters.
A revenue-based export tax is a blunt instrument. It taxes volume, not value. It hits projects regardless of whether they are profitable, marginal or barely breaking even. A tax on turnover doesn’t simply skim windfall gains at the top of the cycle. It hits hardest when conditions are soft.
It is the equivalent of charging every café an extra levy on each coffee sold, even when milk, wages and power prices spike. The largest operators survive, while marginal businesses shut their doors and supply inevitably falls.
