The tax that’s not a tax

Prime Minister Gillard seems to be permanently out of favour with the Australian electorate these days.  Some still cannot forgive her for the way that Kevin Rudd was replaced as leader.  Others cannot forgive her for the “no carbon tax” pledge.

On the first point, there is little to say. Kevin was unpopular with both the electorate and the party.   The party does what it needed to do: that’s the political reality.  It happened to the Liberals in Victoria just this week.

However on the second point,  perhaps Julia has been treated very unfairly.   Social media reports that she said “There will be no carbon tax under a government I lead, but lets be absolutely clear. I am determined to price carbon.” (Uncredited) However an interview on Channel 10 (before the election) was more emphatic the other way.  Either way, there was clearly a shifting in reality once a minority government became inevitable.

Some might argue that this is semantics, but strictly speaking, Julia has told the truth in this matter.  She has not introduced a carbon tax – and she has priced carbon.

Australian Parliament House, Canberra (#404)

Australia does not have a carbon tax.  If you read the Clean Energy Act 2011 (cth), you will see that the legislation applies a ‘charge’ to a unit of carbon.  If you are having trouble sleeping, you may like to read for yourself here:

Why it’s not a tax

Pricing carbon is very different to applying a surcharge on goods and services (like the GST), or assessing that a share of a company’s profit should be paid to the government (Company Tax).  Carbon pricing is about attaching a market-based price (initially fixed) to a resource that an organisation consumes (or produces).  This is pricing carbon.

It is much the same way that local governments price water – yet we don’t call that a water tax!

By contrast, if you wanted to design a true “Carbon Tax”, you would probably charge a premium on petrol, a premium on electricity, and add an additional amount to company tax.  You would also ask the ATO to administer it through the tax system.

It is also important to note here that the Clean Energy Act is regulated by the Clean Energy Regulator.  It is not administrated by the Australian Taxation Office (ATO).  The reason? Because it is not a tax.

Why it matters

Reading between the lines, it is highly likely that Julia did not plan to introduce this type of scheme. Australians forget that Julia was in the position of having to negotiate with the Greens and independents to form a government.   Thus the carbon pricing mechanism that we have today is almost certainly the outcome of pragmatic negotiations between these parties.

Unfortunately these small details are never discussed in the mainstream media.  Julia is unfairly condemned a liar, but she is not.   We do not have a carbon tax; we have a price on carbon.

However, if you’re looking for a politician who does like the idea of a true Carbon Tax (and can explain how he would do it), talk to Tony Abbott:   Tony Abbott’s idea to introduce a carbon tax.

Politics is a dirty game.  It’s such a shame that this is important, otherwise we could all have a good laugh.

Updated  16May 2013 to show that Gillard quotation is unsourced.

Categories: Environment - Carbon Pricing, Environment - Current Affairs, Environment - Politics

Tags: , , , , , , , , , ,

2 replies

  1. Would you be able to point me in the direction of where i could find the above mentioned quote used in it’s original source please, as I would like to include in an article I am trying to write but can only see that it has been quoted, not where and when it was quoted from, Thank

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