Will a carbon tax really work in Australia?
Well, firstly what is a carbon tax?
Wikipedia sums it up pretty well.
The major ideologies behind a carbon tax is for consumers and firms to reduce the usage of carbon
which is apparently affecting the global climate.
Let us assume that climate change is in fact real and occurring.
So can a tax in such a context really have a major impact on consumers behaviour?
1. Essentially it may shore of jobs as firms.
Firms will retain wages and may have to retrench or outsource overseas.
2. A carbon Tax will hurt consumers (Graph)
The graph illustrates reduced consumer surplus.
The only way to counter this is if the Carbon Tax revenue is pumped back into consumer benefits.
Obviously, households expenditure will diminish and consumer confidence will fall.
3. Non-carbon based industry exporters will become less competitive.
Hurting domestic firms and making Australia less competitive.
However, these are just some of the issues of why a carbon tax will not work. Certain factors like accountability of a non-tangible good will be difficult or near impossible.
“A levy of $10 a tonne would be pointless because it would have no impact on behaviour,” –MACARTHUR Coal chairman Keith De Lacy
This basically sums up the position of a carbon tax. Firms will pass costs on to consumers and they will either lose out or have to readjust household consumption.
Now, so what is there is a tax on carbon?
What will the impact be on global climate?
What about other gases such as methane?
Will there also be a methane tax?
What about farm animals that actually produce more climate changing gases than human created emissions?
Stay tuned for one policy implementation that may help in the long run.