Issues and Impacts of Carbon Tax: Response of Businesses and Consumers

Pages: 8 (1996 words) Published: May 30, 2014
Executive Summary
Climate change is a threatening issue in the global. Thus, carbon tax is used as a tool to reduce greenhouse. The Australian Government announced initially the price of carbon tax is $23 per tone and has become a concerned issue with policy proposal makers and its significant effects on all society and economy. The report will outline some features that related to the issues and impacts of carbon tax as well as the responds of business and consumers. The carbon tax will create the big gap between the poor and the rich because of increased price of all goods, especially the reduction of employment in coal, mining, manufacturing industries. Also, the Australian industries will be suffers the international competition because of higher manufactured cost. Therefore, the Australian Government should consider some polices, such as reduction of VAT, a lower carbon tax rate to decrease the regressive impacts

Introduction and background
Today most of countries in the world are facing up the urgent challenges are climate change, for example, the increasing of emissions of greenhouse gases that impact on human and environment. Therefore, The Australian Government proposed a policy on climate change is carbon tax that the polluters will pay $23 per tonne of carbon releasing into the air from July 1st 2012. The purpose of carbon tax is to reduce greenhouse gas emissions by producing a cost charged for pollution permit and stimulating to use surroundings resources more efficiently. However, any policy to reduce emissions such as carbon tax will raise the price. Indeed, the tax will have wide impacts affecting to trade, industrial sectors via the increased prices of goods and services.The report will focus on carbon tax issues and preliminary effects upon businesses via competitiveness, investment and the responses address the adverse impacts of carbon tax.

The effectiveness of tax on supply and demand in microeconomic According to The Economist's Dictionary of Economics (, microeconomics is an analysis of economics that created by individual’s consumers, groups consumers and motivated by cost and benefit factors. Also, microeconomics involves making the most efficient price to maximize useful consumers as well as profit of companies. Indeed, tax will have a significant affect to reduce demand and supply. For example, if a new product raises price because of increasing tax, the buyers tend to buy other goods with acceptable price. Thus, to adapt the demand of consumers, the sellers have to manufacture other products with a price that the buyers accept easily. The impact of a Carbon Tax on Australian economy

The Australian Government proposed carbon tax to reduce the pollution that created some large impacts on the coal; electricity sector; accommodation, agricultural and manufacturing industries, etc, for instance, the risk of long droughts, food costs, climate change in the long terms are the impacts on agricultural area. On the other hand, the increasing shortages of skills labours caused to the business confronting in finding employees. According to Siriwardana, Meng and McNeill (2011), the employment impact of the carbon tax on different sectors of employment in the Australian economy (Table 1). Other impact is to decline the profit and revenues in the retail sectors because of weak consumer, increasing interest rates. Indeed, consumers will experience the price change of goods when firms extra carbon tax in manufacturing costs. The accurate impact of carbon tax on prices related to many components such as renewable energy sources.

* Impacts on income
The Australian Government announced some supports to the low-income earners, pensioners and unemployed persons to decrease the impact of the carbon tax on income via some measures. However, the poor will be affected more as the price than the rich because they spent all incomes for...

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Australian Government . (2011). “Securing a clean energy future”, The Australian Government’s climate change plan. Retrieved from
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Garnaut, R .(2008”. “The Garnaut climate change review”, Report, Chapter 16, Cambridge University Press. Retrieved from
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Rahman, M. M. (2011). “ The proposed carbon tax in Australia: impacts on income distribution, employment and competitiveness”, School of Accounting, Economics and Finance. Retrieved from
Spash, C. L and Lo, A. Y. (2011).“Australia’s Carbon Tax: A Sheep in Wolf’s Clothing?”,The Economic and Labour Relations, Vol. 23, No. 1, pp. 67 – 86.
Zhang, Z. X. and Baranzini, A. (2004). “What do we know about carbon taxes? An inquiry into their impacts on competitiveness and distribution of income”, Energy Policy, 32: 507-518.
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