Australia Drops Carbon Tax

July 17, 2014 Taxation in Australia

CANBERRA – Australia’s carbon emissions are set to rise, while consumer prices are set to fall, as the government drops taxes on carbon emissions.

In a vote held on July 17th the Senate of Australia repealed the country’s carbon tax system, becoming the first country in the world to abolish pricing of carbon emissions.

The repeal, which passed with 39 votes against 32 votes, comes as a result of 2 weeks of negotiation between political parties, and several years of heated debate.

Welcoming the removal of the tax, the Prime Minister of Australia Tony Abbot said “… today the Parliament finally listened. Today the tax that you voted to get rid of is finally gone.”

The government currently estimates that removing the tax will save as much as AUD 550 per year for each taxpayer through reduced costs for consumer goods and power prices, which were previously driven up by the carbon tax.

However, the reduced costs will come at an environmental price, as it is estimated that dropping taxes on carbon will lead to a 12 percent increase in emissions in Australia by the end of 2020.

With the removal of the tax, Australia has no active tax measures to reduce emissions, however, Tony Abbot claimed that dropping the carbon tax will pave the way for the government to institute newer and more effective environmental taxes.

Photo By: Taras Kalapun