Gas giants could face a $5 billion tax hit if Labor accepts a new offer from the Greens.
The minor party is prepared to support legislation to reform the Petroleum Resource Rent Tax (PRRT) – but only if the Government makes one major change.
The Government wants to cap how much income companies can offset through deductions at 90 per cent, which would raise an estimated $2.4bn in the next four years.
But the Greens want the cap lowered to 80 per cent, adding an extra $2.6 billion to the Budget’s bottom line.
The move sets up a choice for Labor; either it agrees to the Greens’ demands and slaps a higher tax on gas companies, or it decides to negotiate with the Coalition to pass the legislation.
The Federal Opposition has yet to confirm its position, but is prepared to support the changes if the Government agrees to streamline approvals for new projects.
“The ball is now in the Government’s court,” Greens leader Adam Bandt said.
“They can work with the Coalition to weaken environmental protections to fast track gas projects or they can get this legislation through with the Greens and crossbench if they increase their miniscule tax take.”
Internal Treasury documents, reported in The West on Saturday, showed the department was looking at a cap of between 80 and 90 per cent during confidential talks with industry before the policy was announced in the Federal Budget.
Meeting minutes showed gas companies voiced concerns about the measure, fearing it would impact cash flow for existing projects and hurt investment at a time when the industry was battling multiple Government interventions in the gas market.
The revelations about the closed-door talks prompted the Greens to accuse to the Government of allowing gas companies to “write their own laws”.
Treasurer Jim Chalmers on Monday defended the Government’s approach, saying it was the best option to ensure more tax from offshore LNG projects was paid sooner.
Dr Chalmers said that, of the three options Treasury ultimately proposed, the Government chose the one which raised the most revenue.
But the Greens are adamant Labor must go harder.
Greens treasury spokesman Nick McKim on Monday wrote to Dr Chalmers to confirm the minor party would oppose the PRRT changes unless the deduction cap was lowered to 80 per cent.
Figures from the Parliamentary Budget Office, requested by the Greens, show it would raise an extra $2.6bn in the next four years.
The West understands Senate crossbenchers David Pocock, Jacqui Lambie and Tammy Tyrrell also support the Greens’ proposal, meaning Labor would have the numbers to get it through the Senate.