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Carbon Tax

Carbon Tax – First Impressions

Simon Curtain
Partner/Private Client Adviser
18 Jul 2011

Details of the proposed Carbon Tax were released last week amidst a high level of media and public scrutiny. While I have read a number of articles outlining the tax and its expected implications, there are still a few questions that need to be answered in my mind.

Firstly, I completely support the main idea behind the Carbon Tax -whereby the bigger polluting businesses that fail to innovate or switch to greener technology are taxed at a higher rate than those businesses that invest in green technology options. It’s based on the premise that if polluting becomes cost-prohibitive, polluters will be forced to find cleaner ways of producing their goods, benefiting the environment and world as a whole. 

However, under the scheme, the cost of living is expected to rise by $9.90 a week with a large number of families set to receive compensation of around $10.10 per week. On the flip side, there are individuals, or families, on higher incomes that will not receive any compensation at all.

To me this sounds like a redistribution of wealth from the “have’s” to the “have not’s”. If this was the Government’s intention, why didn’t they simply raise taxes instead of hiding those intentions within a Carbon Tax? 

Secondly, if the aim of the Carbon Tax is to help the individual to reduce their carbon footprint through a tax, how does giving a large majority of the population tax breaks actually encourage adherence to a lower carbon footprint? If we as a nation are serious about reducing carbon emissions, shouldn’t we all pay the cost of this tax together instead of a select few subsidising the rest?

It is interesting to note that Australia is responsible for around two per cent of global carbon emissions, so even if we as a nation stop polluting tomorrow it would have very little impact on a world scale. I do, however, applaud the Carbon Tax as a bold first step and hope that other countries come to adopt similar measures over time. Only then will we see large-scale reductions in carbon pollution that will ultimately benefit the world for generations to come.

While the ideas behind the Carbon Tax are sound, its execution seems flawed and the true impact on business and households remains to be seen.  

Will the Carbon Tax make you think twice before turning on the heater next winter?

 

Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.