Australia's minority Labor government passed that
country's first nationwide carbon tax this week. The tax will
go to the Australian senate for approval next month.
The details of the plan are extremely complicated and represent
a compromise among a number of different plans and interests, as
well as a compromise between the governing Labor party and the
The initial price for carbon, commencing in 2012, will be $A23
per tonne (equivalent to $C24 per tonne), and increase at 2.5% per
year. The tax will only be applied to 500 of Australia's
The proceeds of the program will be used to provide individual
income tax relief. Many commentators have speculated that the
subsidies and tax relief were necessary to gain some measure of
popular support for the carbon tax bill.
Commencing in 2015, an emissions trading (cap-and-trade) scheme
will come into force, allowing the price of carbon to float. Free
permits representing 94.5% of industry's carbon costs will be
issued to industry. International trading will be permitted,
linking the Australian carbon price to world prices.
Farming and agriculture are exempt, as is motor fuel - except
rail and shipping companies which will pay the tax on diesel. And
the tax doesn't apply to the export of coal (which represents
approximately 25% of Australia's exports, primarily to China).
In fact, it has been estimated that emissions in other countries
from exported Australian coal exceed emissions from all sources
Australian opposition leaders remain opposed to the plan, and
have warned industry not to make long-term investments based on the
plan as they plan to repeal it should they form the next
The Business Council of Australia, which opposes the carbon tax,
has noted that the level of the tax is significantly higher than in
other jurisdictions (50% higher than in Europe), putting Australia
at a competitive disadvantage.
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