Carbon Tax Would Help Australia

August 23, 2011 Taxation in Australia

Carbon Tax In AustraliaThe Australian public has shown significant support for the idea of rolling back the national carbon tax system, but new evidence suggests that the move would have previously unanticipated negative effects on the country’s economy.

Cutting Australia’s strongly debated carbon tax scheme would lead to years of consumer uncertainty, reduced economic investment, and lowered tax revenues. Such a conclusion was drawn by the authors of a new discussion paper published by the Australia Institute on August 22nd.

According to the authors of the report, it would take nearly 5 years to roll back Australia’s current carbon tax system. Even if moves to reverse the tax were started soon after Australia’s next election, scheduled for mid-2013, no legislative conclusions would be drawn until 2016, and no abatement projects would begin until 2018.

The call to remove the carbon tax system is being led by the current parliamentary opposition, which suggests that the need to decrease environmental pollution in Australia must be addressed with grants to encourage national industry to convert to clean technology, rather than new taxes. The carbon tax system is scheduled to begin in July 2012, and will charge some of the country’s largest polluters AUD 23 per ton of carbon emissions. The report’s authors noted that the opposition has indicated that the grants scheme could eventually be replaced with emission trading scheme.

According to the Australian Institute, if the carbon tax were to be removed, consumer electricity prices would rise by approximately 20 percent, as investors drop funding from energy sector projects. National economic activity would also drop by approximately AUD 2 billion.

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