Moran says: "It is the consumer... that pays the costs of the carbon tax. Costs are passed on in price increases or are reflected in lower levels of competitiveness of our industries."

The same is true of corporate income tax. So why is a carbon tax singled out for special approbrium?

Moran: "A carbon tax at $30 per tonne levied only on electricity would raise a further $6 billion ($15 billion if it is on all emissions)."

And the revenue can be used to retire other, less efficient taxes. This, as you may recall, was the argument in favour of the GST. Ah, but that's different, isn't it? -- because the GST was proposed by the Tories!

Moran quotes Churchill: "I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

Churchill, of course, was a supporter of land-value taxation, to which that colourful phrase doesn't apply, because land is a gift of nature and its value is conferred by the activities of parties other than the owner, so that taxing the owner on the value of the land cannot deter any productive activity; on the contrary, it encourages the owner to deploy the land productively in order to generate income to pay the tax.

Moran: "Even without other problems, a tax requires the deadweight of a bureaucracy to administer it and to redistribute the funds it raises."

Again, the same can be said of GST and corporate income tax -- the more so because both are more complicated than a carbon tax.

Moran: "And, if a $26 per tonne enhanced productivity just think what wonders $260 per tonne would do!"

Yes, just think. On Moran's figures above, $260 per tonne across the board would raise $130 billion per annum, which is enough abolish personal income tax!

Ahem... "approbrium" should be "opprobrium".

are there "Tories" in Australia?

The taxes the GST was meant to retire, were the State taxes, which were managed by the .. Labor governments, who of course reneged on the deal.

Maybe if the "tories" did this, we could get the British Labour party to fix it ..

Sounds like some pom fondly remembering the old country, where things were so great, that they came to Australia, (with all their old ideas and prejudices.) and want to repeat and build all that crap up again here .. go home!

Amicus: The states have not "reneged" on abolition of conveyancing stamp duty. If they had, they would have been liable to have their GST revenue cut off. They simply have not yet specified a date for its abolition, because the timetable of the original agreement was ridiculously vague.

As for the significance of the political colour of the State governments, I haven't noticed the Libs in WA abolishing stamp duty. Oh, yeah, that's because WA is being ripped off in the distribution of GST revenue -- by the formula drawn up under Howard.

If you really want to do something about stamp duty, I suggest that you join the stamp-duty strike instigated by Yours Truly: http://is.gd/psd_strike .

A carbon tax will see prices go up on many items. But the author here pays very little attention to the role of compensation in this scenario. With compensation low and middle income groups could actually be *better off*.

Properly structured assistance to trade exposed industries will also be crucial. Experimentation could yield the best results here - Starting with higher compensation - examining carefully the effect on industry - and adjusting accordingly.

The carbon tax is about creating such market conditions that innovations in low-emissions technology is pursued - with consuners having an incentive also to pursue those alternatives.

That said; it is possible that once the transition is made to lower emissions technolog there will be less pollution to tax, and less income to fund the compensation. That might necessitate alternative funding arrangements.

Our hope in response this this is that incentives for investment in loss emissions technology will provide affordable alternatives. Hence cost structures going doing for ordinary consumers anyway. Again - solar paint looks really interesting here! See: http://www.greenlivingpedia.org/Solar_paint

re: the role of tax - As I've said elsewhere - take the examples of Sweden, Holland, Denmark. Large welfare states can be accompanied by strong economies as these examples prove. Welfare and social wage provision are SOCIAL INVESTMENTS. Investment in health, education, aged care, infrastructure CREATES VALUE. And collective consumption via the social wage provides better value than in the context of individual consumption.

But re: a Carbon Tax SPECIFICALLY. Well, if all the money goes to compensation then the effect will be one purely of redistribution and incentives for consumers and investors. But there is a social good in such inventives and redistribution - such that the costs of administration are justified.

I see that the author, Alan Moran, is from the Director of the Deregulation Unit at the Institute of Public Affairs. As per the website it states "IPA supports ..... evidence-based public policy ..... Our researchers apply these ideas to the public policy questions which matter today."

Suggest Alan you look at the evidence for climate change and the most effective ways of addressing it. Think you will find a carbon tax or an emissions trading scheme is the way to go. However as you and your organisation don't believe in climate change you are unlikely to find in favour of any approach that seeks to reduce carbon dioxide emissions. It might be more honest to say that.

With the Australian dollar so strong, the non mining industry is in a very difficult position. The carbon tax would push many challenged industries over the edge. The former lower and middle income employees would most definitely not be better off.

Secondly, with the blocking of the nuclear alternative by Labor and the Greens, there is no viable alternative to coal, and the emissions reductions would come from efficiency gains, and the relocation of industries to non taxed countries.

And Finally for what will we have sacrificed our industry? There is no indication that Australia going it alone will even make a fraction of a percent difference to global emissions.

As it has become clear recently, Juliar and Swan had no intention to tax carbon, the only reason for this tax is to fulfil the conditions the Greens set for an alliance, and Juliar hasn't the guts to stand up to Bob Brown.

Alternative viewpoints to shadow minister comments below in brackets.

With the Australian dollar so strong, the non mining industry is in a very difficult position. The carbon tax would push many challenged industries over the edge. (highly unlikely: much worse price rises have impacted these businesses recently due to exchange rates, fuel price rises, and the higher dollar, plus export exposed industries will get compensation, the rest have the option to increase prices) - The former lower and middle income employees would most definitely not be better off. (lower and middle income employees will be compensated, upper income employees can fend for themselves - again impact likely to be lower than for the recently announced flood levy).


Secondly, with the blocking of the nuclear alternative by Labor and the Greens, there is no viable alternative to coal (not true wind power and solar and geothermal can all fill the gap), and the emissions reductions would come from efficiency gains, and the relocation of industries to non taxed countries (again export exposed industries will get compensation).

And Finally for what will we have sacrificed our industry (no sacrifice required)? There is no indication that Australia going it alone will even make a fraction of a percent difference to global emissions (Australia is a noted laggard in this space, hardly going it alone) (It is in Australia's interests to develop expertise around renewable energies since that is the future).

As it has become clear recently, Juliar and Swan had no intention to tax carbon, the only reason for this tax is to fulfil the conditions the Greens set for an alliance, and Juliar hasn't the guts to stand up to Bob Brown. (well politically your options are limited because even Tony Abbot has committed to the same reductions in Australia's emissions proposing alternative arrangements that just about every commentator believes would be more costly).

Fellas, it is difficult to believe the way greens, which seem to include some posters, cling to this idea of a carbon tax, in the teeth of all logic and reason.

There is no way its ever going to be of any use. Even on first principles and even to the dullest of individuals, Alan is completely correct.

The case for a national carbon tax was doubtful even when it was assumed that the rest of the world would step up and institute something like a carbon tax. Alan points out that, world-wide, there are positives and negatives in temperature increases (assuming that the science is in any way correct and the forecasts anywhere near reality), and are supposed to happen over a full century.

By making various outrageous assumptions, such as made in the Stern report, it was possible to argue the point, and confuse the public. But even that avenue to confuse vanishes totally if Australia goes alone, and there is no indication of any kind that the world is going to follow suit. There are limited emissions trading schemes in Europe, parts of America and New Zealand and that seems to be all we're going to get.

A carbon tax only makes sense as a concession by Gillard to the greens - as a political ploy. As public policy it is obvious, rank, glaring, total nonsense.

Tim Flannery recently claimed that it may take 1000yr to reduce the temp if all emissions in all countries ceased now. This whole sad affair is set to become a scam of monstrous proportions.

Atman, don't start "knocking" Flim Flammery, he is the skeptics' secret weapon.

Rich2,

Small businesses that are competing against imports will not be compensated, neither will other small businesses that use power, such as restaurants, farms, and other small businesses, they will as you say simply increase prices. The house hold compensation will cover the main inputs, but not the total cost of living it will drive.

"wind power and solar and geothermal can all fill the gap" Really. Please feel free to show one single commercial base load supply from renewables other than hydro (no new dams)

The only ETS in existence is in Europe which is extremely limited, and has an effective carbon price of $5, only 20% of what Juliar and Bob Brown want.

If you honestly think this will not shut down industries, you are kidding yourself.