The government’s carbon hatchling has began and the public opinion is taking its stand against the added cost of living. The main point of the tax is to ensure that polluters feel the pinch so that households and firms will adapt lifestyle choices.
However, let us splice this up abit.
1. Since the carbon tax is to allow consumers to feel the pinch, so that they may hopefully reduce the usage of emission technologies, should there not be alternatives first?
For example, if you have a rural dweller and he/she requires a vehicle to travel to transport goods into town on a regular basis;
And no assume that this rural dweller abides by the notion of this tax in that they reduce usage of their vehicle;
What alternative do they have to transport their goods into town? Where are the trains? Large transport companies may be an unsound financial option.
Hence, if the government wants to put a tax, the country’s infrastructure must provide its occupants with alternatives. This tax will not only increase living expenses, it will have ripple effects beyond any tangible accountability.
2. Another goal is to ensure that the global carbon emissions is reduce. And we all know that Australia has one of the biggest coal deposits in the world and Australia supplies the world with numerous amounts of resources.
The government claims that they should do their part as a global society to stop carbon emissions; so why not cap exports of certain resources to the biggest polluters in the world? If their resources to pollute are cut, will that not also not serve the same purpose?
For example, if China, of if the world’s biggest polluters, is capped supply of resources, they will be unable to pollute as much. In a sense, isn’t that a way of Australia helping globally?
3. The ETS is a great theoretical scheme, however, has the theory been fixed for market failures and market externalities? Would it not be possible for the big companies to purchase all the permits and thus monopolize the industries?
The government may step in to stop that, but MNCs will just produce below marginal cost for a period of time and run smaller companies out of business.
A neoclassical model is just here, however to what extent does either school of thought have jurisdiction is unclear.