Understanding Climate Risk

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Archive for July 24th, 2011

The anti-carbon tax campaign is bogus

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So the Australian Industry and Trade Alliance (AIaTA) is spending $10 million in an advertising campaign against the proposed Clean Energy Package.

Step 1. Call it a tax. Which is what its being called in the press and in public. That openly associates the carbon price with the negative of a tax. Technically it’s not – it’s a levy. Much like the Medicare levy, except it’s a pollution levy set at the production end of the CO2 emissions cycle.

Over 50% of the levy collected is being returned to households, some will compensate sensitive industry, some is going to clean energy and carbon sequestration. The income tax system itself is being simplified. The scheme is not perfect, but it’s a reasonable compromise given the circumstances. A tax would go straight into central revenue. Although it’s too late to change the public label, this “tax” is designed as a fixed price mechanism preceding a trading scheme. John Quiggin explains the wrinkles and why most economists favour a price mechanism.

Everyone will keep calling it a duck even though it doesn’t walk like a duck.

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Written by Roger Jones

July 24, 2011 at 11:19 pm