Carbon Tax Essay

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Carbon Tax Essay
In February 2011, the Australian federal government declared a scheme to implement a Carbon Tax from July 1, 2012. Implementing this scheme has generated a controversial debate between Australians. The term “Carbon tax” refers to an environmental tax forcing polluters to pay per ton of carbon which they release into the atmosphere. This essay will provide the economical, social and political implication of carbon taxes, also with its introduction who will benefit and who would suffer. In managing the emissions of GHGs(Green House Gases), carbon taxes will be imposed mid 2012. "Economic theory anticipates that with the increased costs of emitting GHGs, drives emitters to downsize their activities." Salem Press (2009) Carbon taxes would curtail economic efficiency due to the rising prices of goods and services in the overall economy. Just like all consequences of all taxation, this would create what economists would call "deadweight loss". With a reduction of wealth, generative capacity and employment, results in accumulation of deadweight losses. The size of the resulting decrease would rest upon the elasticity of demand, or the dependant worth that Australian's place on ritual tasks that emit GHGs compared to activities that emit less gases or none. Carbon taxes would have an extensive fluctuation of repercussions in addition to cutting down GHG emissions. Industries will have to factor the additional cost of carbon pollution into their business. The impact of this is that goods and services that use a lot of energy, will be more expensive. Households will notice this change in rising cost of goods and service. More than half of the carbon price revenue is being spent in compensation for households. Justine Davis (2011) reports that the first compensation scheme made of two stages is the first form of assistance, that comes in the form of family payments that include an up-front lump sum advance, and the second through a new fortnightly tax...