Mumble: Carbon Tax a plus

http://blogs.theaustralian.news.com.au/mumble/index.php/theaustralian/comments/not_made_in_heaven/

Mumble this afternoon unsurprisingly gives us the news that the Greens are no longer best friends with Labor.  But of course after the election they will be again – this is as much a bust-up as a bust-up between the Libs and the Nationals is.  As a NZer we’re pretty used to this kind of thing, maybe Australians find it interesting and new (even then, I doubt that either).

Buried in there is the assertion that:

“We saw that getting the package in place last July was the best way to allay “great big new tax” fears. As it is Abbott now has to explain how he will pay for the carbon price’s repeal and how direct action will work. More importantly, politically, the government’s decks have been cleared on the issue.”

I’m just not convinced by that.  The carbon tax had a cost on the economy  in increased prices for stuff.  That cost gets passed to the government in tax, less the cost of people calculating the tax and the cost of the government collecting it (admittedly, not overly large as not many organisations directly pay the tax).  The government then returns the majority of that money to households as compensation.

If the carbon tax remains, it will convert to an ETS in 2015.  At that point the price will be floating, and instead of the government receiving tax to fund the compensation, they’ll receive proceeds from selling carbon credits/permits.  Unfortunately, they agreed to tie the market to the EU market, and the price on the EU market is much less than the carbon tax is returning.  So if things stay as they are, there’s a massive budget hole for Labor to fill, and an Abbott govt that repeals the tax would be saving a lot of money.  The question is whether the Libs have anyone who can explain this in a soundbite – and unless Turnbull is going to, I think the answer is no.  Unfortunate.

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