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The Australian Carbon Tax Introduced by Julia Gillard. Pros and Cons and If It Will Succeed

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The Australian Carbon Tax Introduced by Julia Gillard. Pros and Cons and If It Will Succeed
| 2011 | | Australian Business Academy
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[The carbon tax] | Economics Assessment on the Carbon Tax. |

The Carbon Tax - Economics

The carbon tax will reduce emissions and have a positive effect on pollution minimisation.

Nearly every news day we hear about the carbon tax. Many support it and many oppose it. Julia Gillard says it will cut emission whilst others just think it will drive up prices. The analysis undertaken by simulating the impact of a carbon tax of $23 a tonne reveals some interesting outcomes. For example, in the short run, Australia’s real GDP may decline by 0.68 percent, consumer prices may rise by 0.75 percent, and the price of electricity may increase by about 26 percent as a result of the tax. Nevertheless it allows Australia to make a substantial cut in its CO2 emissions. The simulation results imply an emission reduction of about 12 percent in its first year of operation. The tax burden is unequally distributed among different household groups with low-income households carrying a relatively higher burden. Many think that the carbon tax will impact the large polluting industries such as mining and electricity with respect to reducing the pollution they produce but others think they will continue on with normal procedures and just pass on the tax onto consumers. Today I will be trying to prove or disprove the statement of: “The Carbon Tax will Reduce Emissions and have a Positive Effect on Pollution Minimisation”
The Australian government has announced that it will price carbon by introducing a carbon tax from July 1st 2012 with a view to transforming the policy to a market-based emissions trading scheme in three to five years time from its introduction (Gillard, 2010). The tax will begin as a fixed price of $23 per tonne of CO2. The government also has its plan to reduce Australia’s emissions to 5 per cent below 2000 levels by 2020 as the voluntary target in the absence of a logical


References: Allen Consulting Group, (2000), Greenhouse Emission Trading, Report to the Victorian Department of Premier and Cabinet, Melbourne. Pawas Arora, 2011, Australia to announce carbon tax of $23, say media reports < http://www.openforum.com.au/content/australia-announce-carbon-tax-a23-say-media-reports> PETER ANDERSON, 2011, Business down but not out <http://www.abc.net.au/worldtoday/content/2011/s3337639.htm> David McIntyre, 2010, Carbon tax details lets businesses plan http://news.smh.com.au/breaking-news-business/carbon-tax-details-lets-businesses-plan-20110710-1h8ms.html ROSS GARNAUT, 2011, Garnaut pans carbon tax critics <http://www.abc.net.au/worldtoday/content/2011/s3326666.htm> Ross Gittins, 2011, Give and take: this new tax is a piece of cake http://www.smh.com.au/opinion/politics/give-and-take-this-new-tax-is-a-piece-of-cake-20110712-1hc2k.html The Treasury (2011), Strong Growth, Low Pollution - Modelling a Carbon Price, Commonwealth of Australia, Canberra Warren Schudy, 2007, Climate Change: Why a Carbon Tax Makes Sense <http://www.cs.brown.edu/~ws/personal/climate_short.pdf>
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