Carbon Tax

I'm sceptical that government action can influence climate but Mr Rudd has signed Koyoto so we will be getting carbon targets. That being the case we might as well have the least harmful carbon reducing system possible. John Humphreys has proposed a Carbon Tax which has the advantage of cutting petrol prices by about 30 cents a litre. From the press release:

“A better solution is to introduce a low carbon tax of about $30/tonne of CO2-e (carbon dioxide or equivalent) as a replacement for our current range of fuel taxes.

“In effect we already have a high environment tax called the fuel tax. However, the transport sector only contributes ¼ of our greenhouse emissions. It would make more sense to have a lower tax on a broader base. This would simply be good tax policy.

“This would mean an increase in electricity prices and a decrease in petrol prices of about 30 cents per litre. The impact of this change would have little or no net economic cost. It would also be roughly neutral on the government budget and neutral on most household budgets, as the changed cost of electricity and petrol offset each other.

“And it would introduce a price on the use of high emission energy, such as ‘dirty’ coal. This will make alternative energy comparatively more attractive and increase the amount of investment that goes into new technology.”

I hope Mr Rudd and Mr Nelson take notice.