Carbon Tax explained… a non political explanation.

Please note that I personally am completely neutral on political matters and do not have an opinion one way or the other regarding governmental initiatives.
That said, I also would like to weigh in on clarifying how the carbon tax seems to have been designed to work.
A basic fact:
  • According to government figures Australians per capita produce more carbon than anyone in the western world mainly due to the use of coal for generating electricity.
To stem this tide the government is introducing a tax on carbon. It is really a tax on dirty energy generation.
To understand how this works you may want to consider import duty. The idea behind an import duty is to artificially raise the price of imported goods so that locally produced (more expensive goods) can compete on a level playing ground even though the basic costs of producing Australian goods are higher due to Australia’s higher hourly worker rate etc.
The duty is then redistributed to Australian tax payers and probably results in less need for taxes to cover other costs that the government needs to pay for.
Most people understand this and comprehend that the higher price Australian’s pay is directly related to the good of preserving jobs and also a small reduction in taxes due to the funds being used to offset costs in other areas of the government spending.
The carbon tax? Well imagine all our energy was imported and we only had wind farms and solar panels to produce our electricity. The import duty (carbon tax) would make the imported energy more expensive driving down demand and allowing local competing technology like wind and solar generators to be more competitive and increasing the demand for it. The key is how the collected duty (carbon tax) is redistributed. If the tax is redirected to Australian tax payers then the whole process is relatively cost neutral.
For me to understand it, the key was seeing it as a redistribution rather than another tax. In fact the whole process of taxation seems to be about balancing the redistribution of profits from Australian people and companies for hopefully the benefit and common interest of tax payers.
I reiterate. Personally I am neutral to political and national issues. This article was simply an attempt to try and clarify how I think the carbon tax is designed to work.
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