Australian Government Weighs Major Tax Overhaul for Gas Exporters as Middle East Conflict Drives Record Profits

The Australian government weighs a tax overhaul for LNG exporters as Middle East tensions drive energy prices to record highs ahead of the May 2026 budget.

By: AXL Media

Published: Apr 1, 2026, 5:16 PM EDT

Source: Information for this report was sourced from The Straits Times

Global Instability Fuels Energy Price Spikes

Australia is currently evaluating a significant increase in taxes on liquefied natural gas (LNG) exporters, who are reporting record profits as a direct result of escalating tensions in the Middle East. Since the outbreak of conflict on February 28, 2026, global supply chains have been severely disrupted, particularly following the restriction of shipping through the Strait of Hormuz and attacks on critical facilities in Qatar. These events have affected approximately 20 percent of the global LNG supply, leading to a sharp rise in prices across Asia. Consequently, shares in major Australian producers such as Woodside Energy and Santos have increased by 26 percent and 20 percent respectively, prompting renewed calls for the government to capture a greater share of these windfall gains.

Disparity in Resource Revenue Collection

Despite being one of the top three LNG exporters alongside the United States and Qatar, Australia collects significantly less revenue from its energy sector than its peers. Data from The Australia Institute reveals a stark contrast: in 2023, both Australia and Qatar exported roughly 80 million tonnes of LNG, valued at approximately 85 billion Australian dollars. However, the Qatari government secured 56 billion Australian dollars in revenue, while the Australian government collected only 10.6 billion. Economists point out that the existing tax system, which has remained largely unchanged since the late 1980s, allows firms to apply extensive deductions and interest rates against their profits, effectively enabling some operations to avoid paying any tax at all.

Labor Moves Toward Budgetary Reform

In anticipation of the May 2026 budget, the ruling Labor party has directed the Treasury to explore various taxation options. This includes backing an inquiry led by the Greens party to examine how the nation's gas resources are taxed. Treasurer Jim Chalmers has emphasized that Australians deserve a fair return on the resources they own, though any final decision remains subject to Cabinet approval. Proposed measures include a 25 percent tax on gas exports, which proponents claim could generate 17 billion Australian dollars annually. A recent opinion poll suggests that 61 percent of Australians support such an intervention, indicating strong public appetite for reform.