The objective of this study is twofold. First, to investigate the extent to which debt loading is potentially being used to reduce tax revenues in Australia, and to compare it to savings from Centrelink’s Enhanced Welfare Payment Integrity measures. Second, to discuss the effectiveness of the Petroleum Resource Rent Tax, and to compare potential revenues raised by Alberta’s Modernised Royalty Framework, and the U.S. Royalty scheme, using Australian industry data.
The scope of the study is limited to the following. First is a review of the use of debt loading by Chevron Australia and ExxonMobil Australia and estimate the loss of tax revenue over the previous four years.
Second is a review of the PRRT literature identifying regulatory responses to problems that have been recognised in resource rent taxes. The PRRT review will also estimate the revenues that could potentially be raised in Australia by adopting the royalty-based schemes in operation in the U.S. and Alberta, Canada.
Third, the study involves a comparison of the savings identified from debt loading by Chevron and ExxonMobil with the savings estimated from the current Centrelink debt collection program.