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Carbon Dioxide Tax and Trading Scheme

Discussion in 'Politics' started by Scotty, Nov 11, 2011.

  1. Scotty Simon Poidevin (60)

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    I wanted to start a new thread on this so we can separate the debate on the actual science and the political response to it. This thread should be entered into with the assumption that we need to reduce our carbon dioxide emissions, and therefore debating the best way to go about it (and in particular the Australian governments methods). I would also like to discuss other countries attempts and success or lack of in this area.

    I will start with a quote from Bru in the climate change thread:

    The second part of this quote is reinforced by the actions of the likes of our government in that the carbon tax will only apply to mid-high earners, and that lower earners will actually be better off. Does anyone truly believe that this is the best way to go about reducing carbon dioxide in the atmosphere, or that is more about wealth re-distribution and vote buying?
  2. Moses Simon Poidevin (60)

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    I'm still confused as to what the Australian Government actually plan to do to reduce Carbon Dioxide emissions. Was the plan to randomly tax it for a few years then start a carbon dioxide trading scheme? Why not just go straight for the trading scheme?
  3. Lior Herbert Moran (7)

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    I think the plan was to start off for businesses to get the feeling of it first, and get used to paying money as opposed to just start off and purchasing credits.

    I think the 3 year period really is too long and I think it should be a fixed price of just the one year. $23 a tonne is too much as well, with Europe's trading scheme selling credits at I think at around US$7 and NZ's is a lot lower then $23 a tonne. A Carbon Trading Scheme is a good way to cut Emissions, and I think the Government should be applauded in their bid to do this, but there are seriously some flaws in this trading scheme.

    I also think if Abbott is serious about his idea to rescind this critical piece of economic reform, he will be ignoring every credible economist out there.
  4. WorkingClassRugger Desmond Connor (43)

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    The premise of the legislation is to provide incentive for primarily high polluting industry to either restructure or innovate in order to lessen the taxation burden. The tax model slowly introducing a trading scheme would allow time for the economy to adjust the point where it could manage the introduction of a new market in form the the trading scheme. By providing a timeline it allows for business to implement the necessary structures to deal with it. Most of all, it prevents what occurred in Europe when similar trading schemes where the systems were corrupted and manipulated causing serious ramifications for the markets in their formative years.

    Overall, and what is seemingly ignored or just overlooked it that is intended to prepare the economy as a whole for a shift toward a greener future, one where similar schemes will have a significant presence.
  5. WorkingClassRugger Desmond Connor (43)

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    From my understanding, the legislation has been constructed in such a way that to repeal it would mean to do so would leave a significant number of people worse off than without it. I have little respect for the man as first of all because of political orientation but also because he and his horde are incapable of providing little if any workable alternative legislation choices but I imagine even Abbott realises this and knows it ramifications. He may have sworn a 'blood oath' but as he has said himself unless he puts it in writing then you cannot take his word for guarantee.
  6. Moses Simon Poidevin (60)

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    If the idea is to slowly introduce the scheme and allow business to adopt, why start at $23?

    Could they not have a three year pricing scheme that ramps up? Say $5/tonne in year one, $15/tonne in year two and $23/tonne in year three?
  7. Moses Simon Poidevin (60)

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    If the idea is to slowly introduce the scheme and allow business to adopt, why start at $23?

    Could they not have a three year pricing scheme that ramps up? Say $5/tonne in year one, $15/tonne in year two and $23/tonne in year three?
  8. WorkingClassRugger Desmond Connor (43)

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    You'd have to ask the policy makers that question. All I do know is that the current model is the one recommended by Ross Garnaut and supported by Dr Ken Henry.
  9. Lior Herbert Moran (7)

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    100 percent agree there. Although $5/tonne is far too low. Working Class Rugger sums it up pretty well, the tax is designed to make it very hard to repeal, of course it can be repealed, but consumers will be worse off and I think you will find Electricity Prices won't go down.
  10. WorkingClassRugger Desmond Connor (43)

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    It could be to create a sense of certainty. By implementing a stable level instead of one scaling upward, it could be to allow business to know the levels of taxation they have to adjust and budget for.
  11. Moses Simon Poidevin (60)

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    A very affordable first year tax would allow resources to be allocated to the development of systems to manage and measure CO2 output.

    Certainty would be provided by stating the tariff for each of the three years in advance. Tax rate changes are announced years in advance.
  12. WorkingClassRugger Desmond Connor (43)

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    Could have also been set to ensure that the levels are appropriate to ensure it remains revenue neutral. The chances are that regardless of the starting price per tonne, prices would more than likely rise. Setting a stable level allows the government to plan and distribute their compensation schemes and fund investment into new departments such a ARENA (green energy) to move the economy toward and more environmental and economically sustainable model preemptively ahead of any future movements toward similar moves internationally.
  13. Scotty Simon Poidevin (60)

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    There are a few glaring issues with both of these schemes:

    Carbon tax - that some people are better off and others don't pay anything! Clearly it is wrong that only a section of the public should pay for the emissions of all.

    Ets - that it is forecast that billions of dollars will go offshore in the form of purchasing credits. We won't actually reduce emissions we will just offset them via planting trees in china!
  14. WorkingClassRugger Desmond Connor (43)

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    The tax will only come into play for those individuals earning more than $80,000 per year. When you consider the average wage is around $56,000 per year and that the vast majority of the population earn closer to the average than the minimum taxable income. Add to that the rise in the tax free threshold from $6,00 to $18,000 that will accompany its introduction and the increase in tax for those earning in excess of $80,000 will be minimal at best.
  15. Bruwheresmycar Nicholas Shehadie (39)

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    And thats only if they choose to consume the same/or higher amount of co2-intensive products. Also assuming that these companies don't improve their efficiency (regarding emissions/production), which isn't the case in places like europe.

    This is how a market mechanism works. People will buy slightly less luxury items if these companies don't improve their production process. Anyone who suddenly decides to start purchasing more co2-intensive products will certainly be 'paying for this tax'.And thats the whole point.
  16. Scotty Simon Poidevin (60)

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    You seem to imply that luxury items = higher carbon dioxide emissions. I don't think that follows. If you look at cars, many of the luxury ones out of europe have less hybrid and diesel options and are much more efficient that cheaper non-luxury brands.

    Can you explain to me why lower earners should get rebates, particularly ones that rebate back more than they are likely to have to spend extra once the tax comes in? Where is the incentive in that? Why does only 50% of the public pay for the excesses of all?
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  17. Bruwheresmycar Nicholas Shehadie (39)

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    I didn't say anything like that. When you need to cut down on purchases, you cut down on luxary items first.

    And I don't need to explain anything, but I said this months ago. Politicians and massive corporations were telling the public about how this new reform is going to harm the economy, and cripple households. Then when the government listens to this criticism and compensate's people, they are going to whinge about the compensation being unfair. It didn't have to be this way. If only some people in this country weren't so hypocritical.
  18. Karl Bill McLean (32)

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    Both of these men had their recommendatuions VERY selectively adopted.
  19. Moses Simon Poidevin (60)

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    Here is a very good article dispelling myths about wage distribution in Australia. It explains the difference between average and median, and also explains how you perceive average by whom you associate with.

    According to this 2008/09 ABS tax data, 20% of men and 8.5% of women earn in excess of $80,628. This accounts for 37.2% of income in Australia, and contributes 54.1% of taxes.

    So the question could be, why does only 15% of the public pay for the excesses of all?

    I'd love to see some data on CO2 emissions by earnings bracket. I would expect 90% of emissions to come from the 85% of population excused from the tax.
    Jnor and Scotty like this.
  20. Karl Bill McLean (32)

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    The Carbon Tax is, in my view, a complete and utter waste of time and just another way to win votes from Labor's heartland while ensuring the (very necessary) support of the Greens. It won't do a single thing to slow down or stop global warming and for us to act in the way Gillard is hell bent on acting without corresponding action from other countires is just stupid on a number of levels. However, this thread was started on the following basis:
    So I shall try to behave.

    For starters, to deal with some preceding comments, it isn't only "luxury goods" that will be impacted, unless you define "luxury goods" as "Any manufactured, modern convenience reasonably necessary for a reasonable quality of life in the 21st century". Lots of punters on less than $80,000/year buy plenty of co2-intensive products, but they'll be compensated. I feel sorry for the poor bloke working 70 hours a week to make $100k/yr to support a wife and 4 kids. You think he's rich do you? This threshold and compensation structure is a cynical political stunt. The Carbon Tax is so riddled with pay-offs and compromises that it's pre-existing futility is rendered even more pointless.

    Lets get a definition of what a "co2 intensive product" is shall we - and get some examples down so we know what we're really talking about. I have had some difficulty getting clear guidance on this from the intertubes, perhaps someone else is more adept than I am. Anything made from metal, plastic or paper or which has chemicals in it seems to be a co2 intensive product. And that's if we just ignore anything to do with the petroleum industry. So that's any car, not just BMW's. Any TV - Sony Bravia's as well as Kogan's. All clothing, not just Armani and your childs school laptop as well as the fanboy's Macbook Air. This notion of a Carbon Tax being easy for the average punter to deal with because they can just stop buying "luxuary products" is ridiculous.

    The other thing that's ridiculous is the notion that we can avoid these carbon intensive products by disciplined and frugal living. Food is a seriously co2 intensive item on your budget, good luck leaving that one off. So is the car you drive, the clothes you wear and the stuff that makes your lights turn on. But everyone else on the continent will be compensated for that and actually be BETTER off according to the Spin. Unless you earn $80,000 a year in which case the Nation has decided that you alone shall bear the brunt of everyone elses carbon consumption. You're kidding right?

    And why are we so passivley accepting of this implication that we must sacrifice our standard of living so that this symbolic but pointless law can be passed? Don't use your airconditioner, don't run your pool filter, have smaller families so you can tiny cars and live in 2 bedroom apartments. And on top of that, it'll cost you more anyway. Brilliant scheme.

    And there'll be no profiteering or abuse of this scheme. No artificial or excessive price rises. And that's because all of Labors schemes work so flawlessly and well. And the fact that we make a bunch of industries less competitive globally barely rates a mention. Why should that matter to anyone.

    If we MUST have a Carbon Tax, and clearly that much is true, at least for now (and don't think it's really that hard to replace it with something more sensible if Abbot keeps his Blood Oath) - it should NOT be a political footbal and a way for Labor to ingratiate itself with it's voter-base. If Labor thinks it's such a good thing, then shouldn't all Australians be treated equally? Lower income earners already pay less tax, get more benefits and welfare etc. It's not like there is a discriminatory application of other taxes like, say, petrol tax.

    So, what is the best way to go about it? There sure isn't any global consensus if the fractured myriad of schemes kicking around at the moment is any indication. Our seems to be the most draconian and expensive however. Yay for us. The countries that really matter (like the USA, India and China) either don't have one or its Mickey Mouse. Sadly, there's no guidance there.

    I'm no economist, but to me if the things at least going to do as little harm as possible, it can't start life as this politically compromised thing designed to keep the Greens happy and the traditional labor voters onside.

    Now, what we have is actually, according to the Government, not a Carbon Tax but an ETS - see below from the Governments own website:

    So, its more like a Cap and Trade with a fixed orice for 3 years then? Great. Arguably the worst of both worlds. The below is some stuff from Wikipedia that seems relevant:

    James E. Hansen has argued in his book (Storms of My Grandchildren) and in an open letter to President Obama, that policies to cap carbon emissions and trade permits for them (see cap and trade) will only make money for banks and hedge funds and allow 'business-as-usual' for the chief carbon-emitting industries.[156][167] He advocates phasing out and protesting against coal-fired power stations that do not have onsite carbon sequestration and imposing a progressive carbon tax.[157][158][159][160]

    Carl Pope, executive director of the Sierra Club, supports a carbon tax over cap-and-trade because employers will know exactly what they paid for the carbon dioxide they produced, and because a cap-and-trade system (with grandfathered permits) rewards those who have the highest emissions now and have done the least to reduce them previously.[168]

    Gary Becker, a conservative economist, expressed his support for carbon taxes over cap-and-trade.[169] Becker won the Nobel Prize in economics in 1992.

    On December 11, 2008, Rex Tillerson, the CEO of Exxonmobil, said a carbon tax is "a more direct, more transparent and more effective approach" than a cap and trade program, which he said, "inevitably introduces unnecessary cost and complexity." He also said that he hoped that the revenues from a carbon tax would be used to lower other taxes so as to be revenue neutral.[170]

    The American Enterprise Institute, Environmental economist Jack Pezzey,[171] economist Jeffrey Sachs (director of the Earth Institute of Columbia University),[172] Yale economist William Nordhaus,[173] The Earth Policy Institute, The Australia Institute, the Centre for Independent Studies, and Harvard professor, Gregory Mankiw also prefer carbon taxes to cap-and-trade.[174][175]

    So its NOT a Carbon Tax. Bummer, I guess. If we had to have one, maybe it would have been better to have made an honest decision about it and been honest with the Australian people instead of playing semantics to get around a stupid promise made to win an election.

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