Carbon taxes, opportunistic taxation or valid charges?

by Mark Benson on March 16, 2012

in Money, Business and Finance

Is the government shaking the money tree again?

The Australian government is running into significant headwinds in relation to the carbon tax scheme introduced last year and set to be enshrined in Australian law. In simple terms this tax is being introduced along the lines of the UK government’s green taxes as a means of saving the environment and it will only “impact upon fewer than 500 big companies”. However, there is growing concern that the carbon tax scheme is nothing but an opportunistic bid to increase government coffers all in the name of “saving the environment”.

Arguments for and against carbon taxes

There are many different arguments in favour and against carbon taxes and while all of them do have their merits there is a growing belief that the government of the day is proving to be very opportunistic in its timing. Claims that the new tax would only impact upon “fewer than 500” of Australia’s top companies seem to be severely flawed and opposition parties are now stepping up to challenge the government.

Arguments for carbon taxes

It would be inconceivable to suggest that there has not been a massive increase in potentially harmful gases released into the environment over the last few decades. This is not a problem associated only with Australia but a problem associated with the world and one on which governments around the world do not appear able to agree. We have seen a variety of international agreements between various governments which have either fallen by the wayside, are yet to be introduced or they have raised nowhere near the amount of taxation income expected.

Whatever your view of global warming and carbon taxes there is a need to challenge the amount of gases and other harmful elements released into the atmosphere. This has an impact on everything from electricity production to oil exploration, from mining to the efficiency of automobiles. There are very few people who would have a major argument against the introduction of some kind of mechanism to help the environment but where will the money be spent when the government has collected it?

Arguments against carbon taxes

The arguments against carbon taxes are twofold in that, as we mentioned above, the government seems intent on increasing taxes to help the environment but where is this money being spent?

It seems that taxation income from the green lobby continues to rise on a regular basis without any major impact upon harmful gases introduced to the atmosphere. Indeed over the last couple of years there has been excessive rainfall across Australia which has led some people to believe that global warming may be nothing but a myth. However, those who believe that the environment is being impacted and the earth is warming suggest that excessive rainfall over the last two years is a result of changes in the environment.

There are some who are against carbon taxes purely and simply because they are an additional tax on business and consumers and others who are against carbon taxes because they do not believe the argument regarding global warming.

Who will pay the carbon tax?

The coalition government in Australia suggest that only a very small percentage of large companies would be significantly impacted by the introduction of a carbon tax scheme. Indeed they believe that less than 500 of Australia’s largest companies would feel any financial impact but opposition leaders believe everything from shopping malls to bus tickets, from haircuts to mining companies would feel the impact of a carbon tax. In reality you can probably mention each and every area of the business and consumer sectors because ultimately any taxation increases for business will find their way down to consumers and yet again consumers will pay the price.

History is littered with a whole array of taxes and additional expenses piled upon businesses around the world which eventually find their way down to the consumer. In reality, if the cost of a service or product increases, whether this is through taxation or raw material price increases, this will eventually find its way down to customers and it is consumers who will ultimately pay the price. Politicians around the world can argue otherwise but in the world of business, if your cost base increases then the cost to the consumer will also rise.

Legal challenge to carbon tax scheme

Mining magnate Clive Palmer has become something of a thorn in the side of the Labour government in Australia and is currently taking the authorities to court regarding the proposed carbon tax laws. He alleges that his own legal advice suggests that it may be unconstitutional and there may be issues with regards to the way in which any taxes would be collected. However, Australian government lawyers also believe that there argument is watertight and will withstand any legal challenge from any third parties.

Whether or not this particular legal challenge is successful there is no doubt that business leaders across Australia are furious at the timing of the carbon tax scheme. It comes at a time when the Australian economy is starting to slow down and both businesses and consumers are feeling the pinch. The introduction of a new tax would heap more pressure on businesses and consumers and with some shopping centre landlords already writing in specific “carbon tax scheme” small print into their tenant contracts the impact is likely to be felt right across the board.

Is global warming a myth?

Whether or not you are true supporter of the fight against global warming, and the impact which industries around the world are having upon the environment, there is no doubt we have seen significant climate change around the world. Indeed Australia has suffered a very turbulent climate over the last few years ranging from significant droughts to excessive rainfall, from coastal erosion to powerful storms.

There are some who believe that the government would gain more support if the collection and the specific investment of these carbon taxes was more transparent and consumers and businesses could see where they were being spent. At this point in time many people believe that the Australian government is being particularly opportunistic by jumping onto the green bandwagon and increasing taxes to make up for falling government income streams.

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