Contributed from Victoria
At a time when Australia’s addiction to fossil fuels should be wound back, fossil fuel extractors keep on enjoying perks that rank them at the top of no tax paying corporations operating in Australia.
Legalised creative accounting allows them to post losses on paper, while allowing them to pay big dividends to shareholders. All companies enjoy this. Oil and gas companies also have the Petroleum Resource Rent Tax (PRRT). which is so full of holes that it has meant little tax is collected from it.
This is where the story on Shell’s Gorgon gas project comes in. This is Australia’s biggest gas project, expected to pump out 15.6 million tonnes a year from offshore platforms in West Australia, when in full operation.
In Shell’s latest annual report, released in March, it is explicitly admitted that the company will never pay the resource tax, despite raking in billions. This applies to the second project, Prelude, as well as to Gorgon.
The Gorgon project is a joint venture. Shell owns 25 percent of it, Chevron 47. 3 percent, and ExxonMobil another 25 percent.
This tax avoidance is possible because it only applies when a project is in full production, sand it allows offsets from costs incurred in exploration, and falling global prices. In other words, the tax guarantees and subsidises the corporation’s bottom line. Shell can claim “unrecognised losses” caused by the tax.
To date, these unrecognised losses amount to $51.7 billion, and this is expected to balloon out in coming years. It means that Shell will likely never have to pay.
It goes to show the extent of political clout corporations like this have.
When one considers that it is those who do pay their tax are the ones who eventually foot the bill, this is impossible to justify. Doubly so when Australia has a global responsibility to lessen the carbon footprint.
Subsidising profit from carbon extraction is not the way to do this.