A tax by any other name


A tax by any other name

The federal government's current hyperbole promoting a carbon tax is gradually being revealed as nothing but a cynical exercise in revenue raising.

The Labor government is seeking to exploit the perfectly sensible concern of many voters with the greenhouse effect and global warming. An Australian Financial Review poll undertaken by AMR-Quantum in January has revealed that support for the introduction of a carbon tax at 29% of respondents, and 33% amongst 18-24 year olds, makes it the second most palatable new tax option, next to a wealth tax.

While the relative saleability has made it a politically attractive option, it is not likely to be of much use in tackling greenhouse gas reduction.

Philip Toyne, former executive director of the Australian Conservation Foundation and now executive director of the Environment Strategies Directorate within the Labor government's environment department, is the top bureaucrat charged with selling the carbon tax as part of a package of measures aimed at meeting greenhouse gas reduction targets. He admitted during a consultation with business representatives in early February that the proposed tax of $1.25 per tonne would produce only a very small reduction in carbon dioxide emissions. Estimates of the level of taxation required to lower carbon dioxide emission levels significantly have been much higher.

The government's approach is all the more cynical in the context of the current corporate woodchip give-away. In September it was reported that land clearing and forestry were responsible for 131 million tonnes of a total of 572 million tonnes of carbon dioxide emitted in Australia in 1990.

Referring to the tax as an environmental levy, rather than a tax, industry minister Senator Bob Collins said it would work as a revenue raiser. Under the current circumstances, he said, no minister wanted to compel a reduction in greenhouse emission, while the revenue raised could help implement measures aimed at increasing energy efficiency. But as the Australian Financial Review points out in its February 9 editorial, there will be no compulsion for business to reduce overall emissions.

Moreover, less than half of the revenue raised is to be devoted to these measures. The remainder of the projected total of $960 million over three years will be consigned to general revenue, to meet business-driven targets of budget deficit reduction.

This position is consistent with the ALP's "no regrets" policy that any greenhouse response not have adverse economic impacts or affect Australia's competitiveness in the absence of similar action internationally.

The position has been carried through by the proposed exemptions from the tax, including both fuels currently subject to an excise and energy exports. This pretty much narrows the impact down to domestic electricity generation, most of which in intended to be borne by household consumers.

Indications are that the higher costs to be borne by domestic consumers, while imposed in the form of a flat tax and therefore highly inequitable, aren't so large that they are likely to have much effect in the consumption patterns of the millions of household electricity users. It has been estimated that electricity prices will rise by 1% and gas prices by 0.7%, put at an increase of $10 per year for household energy bills.

In view of all of these factors, the federal ALP's carbon tax should be seen for what it really is — a cynical attempt to put the cost for industry's economic and environmental failures on working people.

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