What does the carbon tax mean to us? Is it the new ‘green tape’?

12/04/2012 The Carbon Tax comes into effect on 1st July this year and has been set at a $23 per tonne carbon emissions tax for the nation’s Top 500 polluters. The negative groundswell is rising and from what I can see confusion and hype still prevail. The New South Wales Government is predicting households could soon be paying an extra $300 a year for electricity.

Meanwhile, the Federal Government continues to reject its carbon tax is to blame and the Opposition is animated with condemnation - referring to the tax as ‘’green tape’’ that will jeopardise $900 billion in investments and infrastructure. Green tape or Green circus?

The carbon tax is affecting big business, households and NFP’s. In mid-February this year, Qantas Chief Alan Joyce claimed the airline would be seriously impacted by the tax, which is estimated to add a $110-million-a-year hit on the company. ’’It is going to make it harder to keep employing people in this country," he told reporters in Canberra. Both Qantas and Virgin estimate the carbon price will add around $3 to $3.50 per seat per domestic sector to the cost of a ticket.

For now, the effect on SME’s is minimal. Small businesses won’t be required to pay a carbon price and we won’t have to count or monitor our carbon pollution or electricity use. According to my reading, the impact of a carbon price on small businesses will vary and most of us won’t be significantly impacted. Not so, outside the workforce however. Our domestic utility bills are rising.

Industry Minister and Climate Change and Efficiency Mr Greg Combet claims, "Any electricity price rise that IPART indicates this week that is attributable to the carbon price coming in, is met by the Federal Government paying tax cuts to families, increasing family tax benefits for families with kids, an increase in the single pension, an increase in the pension for couples, payments for self-funded retirees," The truth remains to be seen.

Ms Gillard and state premiers will meet with their business advisory forum this week, which includes the heads of the Business Council of Australia, the Australian Industry Group and the Australian Chamber of Commerce as well as business leaders Telstra's David Thodey, Wesfarmers' Richard Goyder, BHP Billiton's Marius Kloppers, and Rio Tinto's David Peever to discuss. They are calling on Julia Gillard and state leaders “to axe over 240 federal and state climate change and energy efficiency policies, scrap environmental assessment double-handling and fast-track major project approvals”. There are claims past regulations have included “the re-regulation of the labour market, new regulations on shipping and road transport and the introduction of a raft of new taxes with associated compliance costs”’.

Greens leader Bob Brown provides a different view and attacks the complaints against the Carbon Tax as a "war on the Australian people's quality of life and the environment by the big end of town. These big corporations, many foreign owned, want to bulldoze decades of environmental law which is too flimsy and inadequately policed as it is," he said.

Back to the Opposition’s views, climate action spokesman Greg Hunt has stated in a meeting of more than 80 steelworkers and government and industry representatives in Melbourne this week, that the price on carbon was a reverse tariff on the steel sector. Australian Workers' Union national secretary Paul Howes even goes as far to say the steel manufacturers are on the "brink of collapse", largely due to the high Australian dollar. The carbon tax is a reverse tariff on Australian steel, it will be a tax on our exports, but it will leave imports untouched, so the carbon tax is the biggest threat to the steel sector." He pushed the shelving of the price on carbon.

Although the carbon pricing scheme will impose costs on big polluters which is expected to create inflationary price increases, in terms of the impact on households. The treasury estimates that an average family will pay $9.90 more per week in the first year of the scheme’s introduction. The government has done two things in an effort to soften the impact of potential price rises. The tax-free threshold will be more than tripled from $6,000 to $18,200, which means that 1 million people will be exempt from the need to pay income tax or file a tax return and people earning less than $80,000 per year will receive a tax cut which could equal approximately $300 per year. And there will be an increase in welfare payments to pensioners and self-funded retirees, as well as family payment recipients.

The carbon tax story remains convoluted and complex and the effect on small business uncertain. While the promises are that we won’t be effected, I think the main issue is trust. After all, we were originally promised there would be no carbon tax. Watch this space! The truth remains to be seen.

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