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OT - new carbon tax 25-Feb-2011 At 1:34:39 PM Philtown

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On 25/02/2011 maxdacat wrote:
>My initial thoughts are wtf?
>
>- buinesses that pollute will pass the tax on to their customers
>- low income earners will get "help" paying their bills
>- those who can afford to will continue with the status quo
>- money raised from the tax will go towards administering it
>
>net result - somewhere between jack sh*t and bugger all.
>
>My main point of reference is that a) carbon emissions fell during the
>GFC which tells us that to reduce emissions you need to similarly reduce
>economic growth. b) if you want people to buy less of something (ie carbon
>based energy) you need to increase the price (subject to elasticity), so
>how is reimbursing people for price increases supposed to reduce consumption.

You answered your own question. Low income earners get assistance, not everyone.
You're right that 'those who can afford to will continue with the status quo', but most people won't be able to. That's the whole point of a price signal.

The Garnaut review was to figure out how much the price hikes would encourage people to change their behaviour (economics, not science). And he reckons pretty effectively. Prices will go up proportionally more depending on how carbon intensive the industry is, so there's an economic incentive for people to reduce their consumption of the areas that emit the most.