The Australian Government introduced a Petroleum Resource Rent Tax
(PRRT) on offshore oil and gas deposits in 1984 and since then it has
raised in excess of an additional $1 billion a year in revenue over and
above the normal company tax on income. The Australian Government
has introduced a Mineral Resource Rent Tax (MRRT) on iron ore, coal
and gas from coal seams effective from 1 July 2012. The MRRT has been
met with criticism from certain mining companies and noted economists.
However, Australia currently has a budget deficit and an MRRT is being
viewed by the government as a possible solution to balancing the budget.
A Resource Rent Tax (RRT) has been used by a number of countries such
as the United Kingdom and Norway to increase government revenue from
their ‘North Sea’ oil reserves. It would appear that this type of tax has a
number of desirable attributes, especially in relation to efficiency. Is it
now time for governments to consider a wider application of a rent tax to
other industries and resources? A ‘rent tax’ being a tax on land is now an
accepted form of taxation in many western economies such as Australia,
New Zealand and the United Kingdom. There are a number of businesses
such as the airline industry, the fishing industry, the Australian funeral
industry and the timber industry that generate an economic rent due to
their dominance in a particular business sector. This paper examines a
number of those industries and contends that, due to the super profits
being generated by these businesses, governments should consider the
imposition of a rent tax.