non price increasing carbon taxes

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Tony Abbott has already stated that there will be “no carbon price on consumers” under the Coalition. As Geoff Carmody has pointed out in the AFR and elsewhere, this is ludicrous. I suspect that Abbott really means no taxes or other action on climate change, but assuming that this is not the case, any new climate change initiative will and should impose costs on consumers. Imposing a tax on producers does not mean that the incidence of the tax is on producers, and ultimately we need better price signals to move our economy from being such an energy hogg. Unfortunately both sides of politics have played this game of we can change the world but we’ll do it by not making any (median) voter worse off for some time.  Disappointing but predictable.

4 Responses to "non price increasing carbon taxes"
  1. He was careful to say “consumers” which sounds very odd. I think he just means that there won’t be enduser taxes on the carbon content of energy (petrol, electricity etc). Which doesn’t rule much out. One of the big attractions to politicians of regulation as well as tradeable permits is that it doesn’t as obviously increase prices as a tax does in the minds of the economically illiterate.

  2. Basically what he is saying is that instead of a straightforward regime that creates clear price signals and allows consumers to adjust their consumption choices in direct response, he favours some sort of convoluted scheme to obfuscate the burden borne by consumers, which almost inevitably lends itself to distortionary and suboptimal outcomes.
    How annoying that we cannot get anywhere near a carbon tax or cap and trade because of the effect on the consumer. guess what, the consumer is the one consuming all the energy either directly or indirectly. Policy on energy externalities pricing is always going to affect the consumer and well it should.
    I have had more than enough of this ridiculous populism.

  3. A carbon “levy”, in lieu of a tax? Perhaps the populists can sneak it into the voters’ electricity bills…

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