The risk of carbon tariffs hitting the poor …
by Tim Wilson, March 22, 2011
The Australian government has taken the extraordinary step of announcing it will seek to legislate a carbon tax as a stepping stone to an emissions trading scheme while political will on the issue elsewhere is in retreat.
The impact on the Australian economy from a carbon tax is huge, but not relevant to this blog. What is relevant is the impact on those in the developing world and whether Australia will impose taxes and tariffs on imports.
Australian Trade Minister, Craig Emerson, has importantly rallied against a push for a retaliatory carbon tariff against imports from countries without a carbon price.
But there’s no guarantee it will end there. Advocates for a carbon tariff include the heavily political and influential Australian Manufacturing Workers Union.
During the last Australian debate about a carbon price the then Rudd government proposed providing free permits into the scheme for emissions intensive trade exposed industries to avoid tariff calls. It was arguably not enough. A tax would require equivalent rebates to avoid similar calls.
Trade Minister Emerson is one of the most market-orientated Ministers in the Gillard government, but he is often a lone voice of dissent against bad policy. And rarely gets his way.
As the debate about a carbon tariff develops it will be important for poverty-alleviating free trade advocates to hold their ground.
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The Greek prime minister has said that there may need to be new Europe-wide forms of taxation to help pay for the bail-outs that will be needed by the growing number of crashing economies in the euro-zone. His suggestions include “carbon dioxide taxes” which, he says, could provide “important revenues and resouces for funding such a [bail-out] mechanism.”
I’ve never actually heard a major politician (let alone a national leader) admit this before: what Mr Papandreou is saying is that carbon taxes would have not have the effect of reducing emissions – because if they did, they would be useless as an additional form of revenue. All the hokum that is talked about protecting the planet by taxing carbon use is just a front for the real purpose of such penalties on industry and consumers which is to raise more money for governments to spend (in this case, on trying to remedy their own political follies).