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Carbon Tax Explained

By Greg Oates, WATCH (Wodonga Albury Towards Climate Health)

I have chosen to write about Carbon Tax in Living Lightly as I see it as an attempt by our government to ensure we live more lightly, by reducing pollution that goes into the atmosphere, and thus look after the planet.

A lot of people do not seem to understand how the carbon tax works. Recent fuel price rises have even been blamed on the carbon tax when in fact fuel is exempt from it.

As Tony Abbott said when it was first mentioned to him. The carbon tax is a simple and efficient method of fighting carbon pollution. Australia is a market economy and uses prices to control production. If the price of an item rises, people will demand less of it.  If the price drops, people will demand more of it.

The carbon tax only applies to the top 300 polluting companies in Australia. If a producer e.g. an electricity company produces carbon in the process of production, the carbon tax pushes up its price.  Producers want to avoid higher prices because, if they raise their price, their customer may move to another cheaper supplier. For this reason, companies who are hit with the carbon tax won’t merely pass on prices but will try to lower production costs e.g. use an alternative cleaner energy to avoid the tax. It is for this reason that the inflation rate has not increased dramatically since the carbon tax was introduced while, at the same time, our pollution levels have dropped.

Another advantage is that the revenue from the carbon tax has been used to assist those companies most affected by the tax. The array of solar panels at our local Mars factory is an example.  In addition, to cover anticipated price rises, most taxpayers received either direct compensation, or a tax cut ensuring they are not disadvantaged should part of the price rise be passed on.

If the carbon tax is removed, it will make dirty production techniques cheaper and more companies will go back to using them. Personally I like the carbon tax. As I see it, we pay to dump rubbish at the tip so companies should pay for polluting/dumping carbon in our skies. After all carbon pollution adds to the green house effect which in turn affects the health of the planet and its inhabitants.