A crisis profit tax is a tax on the additional windfall profits of big corporations made due to external circumstances or events, like a war or a pandemic. They discourage profiteering and are a fair way of restoring money to the community.

The money from these corporate taxes can be used to help tackle widening inequality and improve essential public services that benefit everyone equally 

Crisis profits taxes have been used since at least the 1900s. They have been used prominently in the UK, US and across Europe to rebuild after conflict and tackle company profiteering. Today, many European countries have crisis profit taxes in place, particularly on fossil fuel industries. 

Oxfam research estimates that a 90% tax on the crisis profits of Australia’s top 500 companies would have generated $88 billion between 2021 and 2023, which could have been used to tackle inequality and poverty.  
 
This 90% tax is applied only on the excess ‘crisis’ profits, which are profits that are 20% above the average for the prior four fiscal years. This is the same methodology for calculating excess profits seen in the ‘EU Solidarity Contribution’, a windfall profits tax that was widely applied in EU countries in response to the corporate profit spike between 2020-2023. Across the EU, different tax rates were applied to excess profits in different sectors. 

Companies in Australia are subject to a federal tax rate of 30% on their taxable income or 25% if they are a base rate entities. Australian companies only have to pay tax on profits made in Australia (active and passive) and on foreign passive profits. 

Firstly, we must require multi-national corporations to provide public information on their business operations, including revenue, profits and taxes paid in each country they operate in (called public country-by-country reporting). This transparency exposes when companies are profit shifting to avoid paying tax and acts as a disincentive to do so, as they can be publicly named and shamed. 
 
Secondly, we need global agreement on minimum corporate tax rates. Currently, countries globally have agreed to a 15% minimum rate but there are many loopholes that mean corporations can still pay far less. Economic experts are now advocating for a 25% minimum corporate tax rate to be implemented by countries globally, with no loopholes for tax avoidance. 
 
Thirdly, Australia can individually introduce stronger taxes on corporations and close the loopholes. For example, the Australian Government introduced the ‘Petroleum Resource Rent Tax’ (PRRT), a 40% tax rate on profits of offshore oil and gas mining projects to ensure these corporations pay their fair share of tax. Unfortunately, they caved to industry pressure and made so many loophole concessions, that the PRRT is raising very little money. If the Australian government removed these loopholes, it would raise many billions of dollars annually.