Saturday, March 5, 2011

A Great Big New Tax on Everything

One thing we know for certain about Tony Abott: He is a man who can spot a 'Great Big New Tax On Everything.' Although his task has been made easier in this respect, for the 'Great Big New Tax on Everythings' have been proliferating like jack rabbits.

First there was the 'Resource Rent Tax,' a tax on mining profits above a certain level, first proposed by Kevin Rudd and then modified by Julia Gillard. Abbott identified both original and modified proposals as a 'Great Big New Tax on Everything.'

More recently, we had the 'Queensland Natural Disaster Levy,' a tax on anyone earning more than $50 000 who's house wasn't washed or blown away, to help with reconstruction after the cyclone and floods in that state. Abbott had this one pegged as a 'Great Big New Tax on Everything' too.

And now that we've finally reached what will likely be defining moment of the Gillard Government (or the Gillard/Whoever They Replace Her With Before the Next Election Government), the attempts to lower Australia's carbon emissions by attaching a price to them, Abbott has found another one. Gillard's embryonic proposal to introduce a modest tax per tonne of carbon released into the atmosphere, designed to help the environment and, you know, save the planet, is actually another one of these bloody 'Great Big New Tax on Everythings' that the Government is so keen on:

So a good question would seem to be: Why is the Labor Party so keen on bringing in a Great Big New Tax on Everything?

And an even better question might be: How is it that a member of the Howard Government, who really did introduce a Great Big New Tax on Everything in the form of the GST, is allowed to get away with this nonsense?

But we can leave those questions for another time.

Right now, let's just reiterate what is obviously an established fact: TONY ABBOTT IS VERY OPPOSED TO NEW TAXES TO HELP LOWER CARBON EMISSIONS.

He's stated this opposition, in every available media outlet at his disposal, so often that you start to wonder if his vocabulary contains anything more than the words 'opposed, 'new,' 'tax,' 'on,' and 'carbon.' Which, if true, is probably a bit dull for his wife and kids, let alone those of us who pay regular attention to his public pronouncements.

But this is not to say that he doesn't think carbon emissions shouldn't be lowered. He may be a late convert to the whole 'Inconvenient Truth,' global warming business, but he's inside the tent now. His previously stated skepticism (Abbott once referred to global warming as 'absolute crap') has gradually given way to oft repeated acceptance.

What, then, does the alternative Prime Minister propose to do about lowering Australia's carbon emissions? If he's not going to put a price on them and let the market sort it out? How's he going to fix this problem at no cost to us, the taxpayer?

Well, he's got a $10 billion dollar 'Direct Action' policy that would fund a variety of initiatives designed to directly lower emissions; tree planting, clean coal, free fluorescent light bulbs for all, that sort of thing. A whole range of things really, hundreds of them. And best of all: No new GREAT BIG NEW TAX ON EVERYTHING!

But wait.

Whereabouts is he going to get his $10 billion worth of funding from to pay for all these warm and fuzzy programs? I half expected him to go:


when he was asked this question, and then maybe throw a smoke capsule on the ground before making for the exit, in the style of some sort of super villain:

For the very obvious answer is that that $10 billion dollars is going to come from the Australian tax payer, either through new taxes or reallocation of funds from existing revenue. A case of 'Half a dozen new, small taxes on everything' perhaps?

And this is where Coalition fantasy land starts to diverge from reality. For the Government's heavily criticised carbon tax is actually a tax on business, not on us regular punters. At least not directly. Businesses are the ones that are going to have to pay the levy for whatever tonnage of carbon they emit into the atmosphere (currently expected to be about 4c per 100 trillion tonnes or something equally negligible).

Abbott's argument is that businesses will then pass this extra tarriff onto us regular punters in the form of higher charges, and so higher prices, and this forms the basis of his GREAT BIG TAX ON EVERYTHING spiel. Which undoubtedly has some basis in fact. Nevertheless, us punters have a choice about how we spend out money. We can choose to accept these extra prices and stick with the same polluting companies that we've always used or, or, we can take our money elsewhere and buy products and services from carbon neutral industries that don't attract the tax and so have cheaper prices. This is the whole purpose of putting a price on carbon through a tax (or an emission trading system): peoples desire for the best price and the best value for money will reward non carbon industries through increased business.

Which is the market in action.

But with Abbott's proposal, there's no choice at all. He'll simply take $10 billion from our collective pockets and funnel it off to whatever fiddling-at-the-margins schemes he thinks will play best in the media. Which will mean more tree planting and more solar panel rebates, all paid for directly by us. And tree planting and solar panel rebates are all well and good, and certainly have their place in an overall climate strategy, but they really aren't an effective centrepeice of a policy if the goal is really to reduce carbon emissions in a cost efficient manner.

Take a recent report in 'The Age,' for example, that showed that in the last ten years Federal Governments of both stripes had spent $5.5 billion on climate reduction policies of the tree planting and solar rebate type that had reduced our emissions at the cost of $168 per tonne. And then compare that to the Government's mooted carbon tax that will reduce emissions at the price of $20 - 25 per tonne (not 4c per 100 trillion tonnes as has been inaccurately reported elsewhere) and see which one you think is the better policy.

Hmmm... the $168 dollar per tonne one paid for by us? Or the $25 per tonne way paid for by the polluters? Tricky...

It says a lot about the current state of political debate in this country that Abbott is allowed to go around the country masquerading as an anti-tax campaigner, while simultaneously proposing to take $10 billion dollars worth of extra taxes from us. Government in fighting and a lack of detail in what has been announced so far has let Abbott off the hook.

Julia Gillard must also lift her game as the Prime Minister has shown, so far, that she is not a good sales rep for her Government's ideas. The focus is on her and the ALP and they must deliver in two areas simultaneously. Explaining their carbon tax policy better and turning the attention of the media and the people to the cost and flagrant hypocrisy of what the Opposition is proposing.

It's a chewing gum and wallking at the same time moment for Labor and, so far, they haven't shown that they're capable of doing either.

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