Letter: Carbon tax in Australia
Paper Edition | Page: 8
Although the issue of climate change and global warming are fairly high on the agendas of most governments, in practice, across nations, there is a wide variation in policy response to the emerging threats. This is not surprising because different countries have different priorities depending on their state of economic progress.
Governments, especially in major emerging economies, are forced to strike a balance between domestic compulsions — poverty alleviation, for instance — and policies that help combat climate change.
Australia has introduced its highly controversial carbon tax after years of bitter political wrangling. Carbon tax in Australia, effective from July 1, will penalize (tax) big polluters for carbon emissions at a flat-rate fee of A$23 (US$23.52) per ton of emissions. Carbon tax has taken various forms in different parts of the world based on unique economic circumstances and taxation systems.
The top 500 emitters will be charged a flat-rate fee of A$23 per ton of emissions by the government in the first year. The A$23 per ton is to be indexed to inflation and will rise to A$24.15 in 2013-2014 and A$25.40 per ton in 2014-2015.
From July 1, 2015, the price paid per ton will be set by the market via a cap and trade system. The main objective is to cut Australia’s carbon emissions by 5 percent by 2020. Major industries affected include electricity and energy producers, mining, business transportation, waste and industrial processes.
A price on carbon will not apply to fuel for off-road and on-road light transportation by agriculture, forestry and fisheries. Households and small businesses will also be exempt from a carbon price on fuel, although a six cent reduction in the off-road diesel fuel rebate will cause general pain for junior miners and for rural and regional business.
Carbon Tax Revenue will be reinvested into clean energy technology and renewable energy projects. Offshoot development funds will also be set up to focus on biodiversity, low carbon agriculture, small business grants and indigenous communities. The government has promised to compensate 90 percent of households for any increase in energy bills via tax cuts or increases to family benefits.
Carbon tax is essentially an indirect regressive tax (tending to hurt low-income earners). Carbon tax is expected to raise some A$15 billion in government revenue, which will assist with the ongoing global financial crisis. It is designed to change how manufacturers go about their business, by reducing their emissions so they don’t pay tax; and it is designed for us, the consumers, to change how we consume non-renewable energy, such as electricity.
The national and international carbon market is set to change dramatically over the next few years and Australia’s carbon tax is a significant part of this transition — organizations must adapt and prepare for a carbon-constrained future.
Climate change is a tricky subject to discuss and its effect on the climate is much debated. But the carbon tax is very real; it is now in Australia and it will affect all Australians. It is a known fact that deforestation, carbon emissions and greenhouse gases contribute to global warming and climate change.
Sunil K Kumbhat