Australian Mayors and Councillors Call for $10 Billion Extra Tax to Combat Climate Change

Mayors and councillors from across Australia are advocating for an additional $10 billion in taxes to be collected from petroleum companies in order to combat climate change. The group of 37 leaders, which includes independent mayors and councillors as well as many Green local government leaders, is calling for reforms to the Petroleum Resources Rent Tax (PRRT) to generate the extra funds needed for climate mitigation schemes at the local level.

The PRRT is a tax imposed on profits from the sale of marketable petroleum commodities, such as crude oil, gas, condensate, liquefied petroleum gas, ethane, and shale oil. Woodside, a major oil and gas producer listed on the Australian Securities Exchange (ASX), has been the largest payer of PRRT, contributing over $18 billion since 2011. However, the company has expressed concerns about further changes to the tax.

In February, Woodside submitted a warning to a Senate Inquiry into the Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023, which proposes limiting the taxable income that can be offset by deductions to 90 percent. The company argued against additional amendments to the PRRT, stating that it is already functioning as intended and provides a fair return to the community without deterring investment.

The mayors and councillors who signed the letter highlighting the need for increased tax revenue emphasized that local governments bear significant costs due to the impact of fossil fuels on climate change. They cited rising sea levels, frequent and extreme fires, floods, storms, and heatwaves as examples of climate-related challenges that local governments must address. However, they also noted that local governments have limited resources to cope with these increasing costs, particularly when it comes to maintaining infrastructure and providing services in the aftermath of climate disasters.

Among the signatories of the letter were prominent figures such as City of Sydney Lord Mayor Clover Moore and Greens Randwick City Council Mayor Philipa Veitch. Lord Mayor Moore declared that the world is facing a climate emergency and stressed the importance of calculating the true impact of burning fossil fuels on the environment, communities, and the economy. She highlighted the vulnerability of residents in the City of Sydney to extreme weather events and discussed various initiatives the city has undertaken to build resilience to climate change.

The proposed Treasury Laws Amendment (Tax Accountability and Fairness) Bill, which aims to limit the amount of PRRT that can be deducted on company tax bills, could generate over $18 billion in revenue over the forward estimates with even modest changes to the government’s 90 percent cap. Australia Institute Chief Economist Greg Jericho suggested that this additional revenue could be allocated to essential public services, affordable housing, and renewable energy.

Despite the calls for increased taxes, Woodside cautioned against further changes to the PRRT, emphasizing that it already provides a fair return to the community. The company argued that any additional amendments could have unintended consequences, such as impacting large-scale investments and creating uncertainty in other sectors, including renewable energy.

In conclusion, Australian mayors and councillors are advocating for an extra $10 billion in taxes from petroleum companies to fund climate mitigation schemes at the local level. They are seeking reforms to the PRRT, which is a tax on profits from the sale of petroleum commodities. While major oil and gas producer Woodside opposes further changes to the tax, arguing that it already achieves a fair return for the community, proponents of increased taxes argue that it is necessary to address the significant costs borne by local governments due to climate change.