The Carbon Tax: What Is It?

Recent speculation over the Carbon Tax in Australia has led to a new debate over the viability of environmental control. To truly understand the concept of the CO2 tax, we need to identify the causes and effects of carbon emissions. Defined as the natural compound in the earth’s atmosphere, Carbon Dioxide (CO2) is a greenhouse gas that causes the elevation of temperature in the earth’s natural crust. This can be harmful for both the environment and living organisms. The recent heightened awareness of the effects of GHG has spurned a new industry and reformed government regulation. Many countries enforced the Kyoto Protocol stipulations and adhered to global UN environmental standards.

Significant producers of CO2 emissions, Australia, China and the US were slow to react to the new global standards, with each country debating the viability of this reform. Mining focused in nature, Australia’s coal industry has traditionally been a key generator of government revenues. Early in 2009, the Australian government worked on the idea of two taxes which would severely impact the industry. The hotly debated mining and carbon taxes struck a chord with various lobby groups and sectors in the economy. As a concept, the mining tax lent itself to increased government revenues from a royalty provision over commonwealth land. The second tax, called the carbon tax was more generalised in its focus, in turn affecting the everyday Australian. Although the carbon tax has not been implemented, it is currently receiving media attention and focus.

So what is the carbon tax, and how will it benefit the environment. A Carbon duty would place a price on all CO2 emissions in specific sectors. Companies or individuals would be required to pay an extra tax to compensate the harmful generation of Carbon Dioxide. With Australia being one of the largest emitters in the world, due to the coal, mining and agricultural sectors, the general public have debated over the fairness of a tax. The average Australia who works in the corporate sector, and is not benefited by mining revenues, believes the tax would be an extra cost that could translate into further appreciation in CPI. Prime Minister Gillard has been adamant in her approach to the carbon tax proposal, with the government receiving significant opposition. It is important to keep the debate in perspective with benefits and drawbacks to both arguments. A carbon tax, will further develop a general environmental sustainability plan, however it could hinder economic growth and mining development. Over the next few months the debate will certain have an impact on the political framework of Australia.