Taxing carbon?
April 2, 2011 3:47 PM   Subscribe

The Australian government is working out the details for a tax on carbon. Where will the money raised in this tax go? What will it be used for?

I've looked on the ALP website, but for some strange reason there are few details of the proposed carbon tax. The wikipedia page, offers a good run-down of the proposed tax, but is a bit light on specifics.

Can anybody point me in the direction of specifics of where the money raised from this tax will go, other than vague "commitments to ensure all funds collected go back to homes and businesses to assist in the transition to renewables." Has the ALP even worked out these details yet, let alone published them?
posted by robotot to Law & Government (8 answers total) 1 user marked this as a favorite
 
Short answer, no they haven't. Parts of this will no doubt be revealed in the budget in May, and the remainder will be when the legislation is tabled.

There are two likely reasons why we're not seeing the details currently:

1. Labor wants to allow the smallest time between details and implementation to reduce rent-seeking and more importantly, noise from opponents of the legislation.

2. Public servants in the depts of climate change and finance will be furiously working to get properly costed and considered legislation ready in time. This stuff is wildly complex and there's a lot to take into account.
posted by smoke at 4:16 PM on April 2, 2011 [1 favorite]


I've not heard anything about earmarking the money. I don't see why it wouldn't just go into general revenue.
posted by pompomtom at 4:17 PM on April 2, 2011


The Pricing Carbon page has the following language:
The Government will then use every cent raised to:
  • Assist families with household bills
  • Help businesses make the transition to a clean energy economy
  • Tackle climate change
posted by zamboni at 4:24 PM on April 2, 2011 [1 favorite]


A carbon tax's purpose is to generate price signals that encourage buyers to choose low-carbon alternatives where available, not to raise revenue overall; and since every business whose input costs go up as a result of carbon tax will pass those costs on to customers and therefore ultimately to consumers, the best thing to do with the tax revenue is just spray it around like carbon dioxide.

Personally I would prefer to see it refunded to the citizenry as a fixed repayment per person, distributed via the ATO - the same way Kevin Rudd's $900 stimulus payment got handed out. This approach has a number of things to recommend it: it's administratively simple, and because payment amounts depend solely on the amount of carbon tax revenue raised and not on individual spending patterns, it will disproportionately reward the poor. There are more poor than rich, so it will be popular with the electorate. Also, the idea of redistributing the nation's wealth to the poor is of course intolerable to the rich, and this will serve as an incentive for them to act in ways that reduce the total revenue available to be so distributed - and provided they don't succeed in simply body-slamming it the way they did with the mining super profits tax, that's going to mean driving down carbon emissions. And it would annoy the hell out of Tony Abbott, who would have to tie his knots in knots to make it sound scary.

The ALP doesn't have the balls to do it that way, though. I expect that what we'll see is a small amount of direct refunding (possibly in the form of income tax cuts rather than direct payments, just to keep the poor in their place) for mainly rhetorical reasons, and the bulk of it being directed into various rich men's pockets.

There was talk of using it to fund a reduction in the rate of GST, but that's not going to happen now that we have Coalition governments in two States.
posted by flabdablet at 4:52 PM on April 2, 2011 [1 favorite]


I've not heard anything about earmarking the money. I don't see why it wouldn't just go into general revenue.

That would certainly be true, if it was a carbon tax. But, it's trading scheme, and one of the differences between tax and a trading scheme is that money is not raised, per se, and it doesn't end up going into the general revenue stream.

The "vague commitments" robotot talks about is all we have to go on, at the moment. I don't personally understand what's vague about them; they seem fairly strident and unambiguous to me, but that's the poster's prerogative.
posted by smoke at 5:23 PM on April 2, 2011


That would certainly be true, if it was a carbon tax. But, it's trading scheme

This was true of Kevin Rudd's "Carbon Pollution Reduction Scheme", which was a trading scheme (although based on a tax). But the currently proposed scheme is definitely a tax.

1. Labor wants to allow the smallest time between details and implementation to reduce rent-seeking and more importantly, noise from opponents of the legislation.

This is very true. Abbott, the carbon-intensive industries and the Murdoch press have shown again and again that they will happily exaggerate, distort or just outright lie as much as they think is necessary to drum up the kind of ignorant, whining opposition to the tax we saw outside parliament house the other day. The government seems to have judged that it's tactically smarter to keep things vague at this stage, with the details coming out closer to implementation time. They seem to be learning, slowly.
posted by A Thousand Baited Hooks at 6:45 PM on April 2, 2011


But the currently proposed scheme is definitely a tax.

In the short term. The intention is to transition to an ETS in 3-5 years.
posted by robcorr at 7:22 PM on April 2, 2011


As everyone else has said, no detail has been released at this stage.

The White Paper on the now defunct Carbon Pollution Reduction Scheme contains quite a bit of detail as to where the money raised was to go - with an increasing number of commentators talking about how the new Carbon Pricing Mechanism is beginning to resemble the old CPRS, you may find some suggested answers to your questions here:

http://www.climatechange.gov.au/publications/cprs/white-paper/cprs-whitepaper.aspx

Appendix E contains a handy table:

http://www.climatechange.gov.au/publications/cprs/white-paper/~/media/publications/white-paper/V2Appendix_E-pdf.ashx
posted by kithrater at 11:57 PM on April 2, 2011 [1 favorite]


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