Beer vs Gas: The Unexpected Ripple Effect Brewing in Australia’s Tax System

Australia is one of the world's largest exporters of liquefied natural gas (LNG). Yet in recent years, it has been estimated that more revenue is collected from beer excise than from the Petroleum Resource Rent Tax (PRRT) on LNG exports (The Point, 2026).

It’s a striking comparison, although, like many things in tax, how it’s measured is part of an ongoing and contested debate. Still, it raises an important question about how Australia captures value from its natural resources.

How the current system works

Australia’s primary mechanism for taxing offshore gas is the PRRT. It applies to profits, not revenue. That distinction matters.

Profit is calculated after costs and the PRRT allows for generous deductions, including depreciation, project costs, and carried-forward losses. In practice, this can significantly reduce taxable income, particularly for large, capital-intensive projects.

The result is that substantial export volumes can coexist with relatively low tax receipts. As Senator David Pocock has noted recently, revenue from beer excise has at times exceeded PRRT collections from LNG exports (The Point, 2026). The comparison is imperfect, but it highlights the broader structure of the system.

How Australia compares globally

Other resource-rich countries have taken different approaches. Norway captures a significantly larger share at 78% of oil and gas profits through a combination of corporate tax and resource rent mechanisms (Norwegian Petroleum, 2025). Other jurisdictions, including parts of Canada and the United Kingdom, incorporate royalties or production-based elements that provide a more consistent public return (The Australia Institute, 2026).

Australia’s approach is more heavily weighted toward profit-based taxation, which can lead to variability in revenue outcomes depending on project economics and accounting structures.

A proposal & a broader debate

Senator Pocock proposed an alternative: a 25% levy on gas export revenue, rather than profits. Revenue-based models are generally harder to minimise through deductions, as they apply to the value of what is sold, not what remains after costs (Accounting Times, 2026). Modelling by The Australia Institute suggests such a policy could raise approximately $17 billion per year (The Australian Institute, 2026).

The proposal has not progressed to formal inquiry. But the debate it has sparked points to a broader issue — not just whether the current system is “right” or “wrong”, but what outcomes it is designed to produce.

A more complex backdrop than it first appears

This conversation is unfolding in a complex environment. Australia is navigating:

• Domestic energy security concerns

• Long-term supply commitments to key Asian trading partners

• A tight and evolving global energy market

Any changes to taxation settings need to be considered alongside these factors, particularly in terms of investment certainty and Australia’s role as a reliable exporter. This doesn’t negate the question of public return, but it does shape how and when reform might occur (Bloomberg, 2026).

Beyond politics: a structural question

Gas taxation is often framed as a political divide. But available research suggests the issue cuts across traditional lines, with broad support for reviewing how Australia captures value from its resources (The Australia Institute, 2026).

At its core, this is less about ideology and more about system design, exploring how should a country balance attracting investment, maintaining stable supply, and ensuring a fair return to the public.

The Ripple Effect

Whether reforms happen in the near term or not, the underlying dynamics remain: significant export volumes, ongoing debate about public return, and a tax system whose outcomes are increasingly being scrutinised. These are fiscal settings as much as they are structural choices that shape markets, incentives, and long-term outcomes.

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References

Accounting Times, Senate votes down Greens' proposal for 25% gas export tax, 17 March 2026.

Bloomberg, Australia Weighs LNG Windfall Tax as World Faces Soaring Prices, 20 March 2026.

Norwegian Petroleum, The Petroleum Tax System, 15 October 2025.

The Point, Gas Giveaway Tracker reveals $350 million a week lost as pressure mounts for gas export tax, 30 March 2026.

The Point, Independent Senator David Pocock calls for 25 per cent tax on gas exports, 25 February 2026.

The Australia Institute, Australia's gas ripoff cuts across political lines, 2026.

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