Already a subscriber?Australia’s policies on taxing carbon and mining have experienced a sharp U-turn since just over a decade ago.
All of this federal and state government spending is paid for via opaque taxes on taxpayers and consumers.Rather than Gillard’s levy on carbon emitters and energy users sending a signal to the private sector to build the future energy system in the lowest-cost way, big government is now at the centre.
“If a levy on embedded emissions were applied to all goods and services sold in Australia, there would be no disadvantage to local businesses and employment. Crucially, every dollar raised would be returned to taxpayers via incentive-sharpening income tax cuts, so households are not worse off and the tax-to-GDP ratio does not rise.It is a similar model to that proposed by Liberal prime minister John Howard at the 2007 election.
The subsidy approach is prone to capture by cronies and special interests, assumes knowledge of the present and future technologies that no one possesses, and can’t match the market when it comes to the optimal allocation of capital. Yet, rather than an economy-wide carbon levy of, say, $50 to $100 a tonne, taxpayers are paying hundreds or thousands of dollars a tonne of carbon abatement under other targeted schemes.