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The Forum > Article Comments > Cut tax, carbon to green economy > Comments

Cut tax, carbon to green economy : Comments

By Malcolm Turnbull, published 1/4/2008

Any emissions trading scheme revenues must be matched by a reduction in other taxes.

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It is a sound general principle that taxes should be applied on the resources used rather than the production of goods and services. Malcom Turbull (and I say this as a previously very active member of the ALP) is absolutely right when he suggests that other taxes, such as income tax, should be reduced in favour of carbon taxes. But will he show the necessary political courage and support a federal land tax?
Posted by Lev, Tuesday, 1 April 2008 9:43:21 AM
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I agree that a carbon cap is superior to carbon taxation. The big unknown is how much the proposed auction system could raise. Problems include collusive bidding, a recession that lowers the price since carbon use has declined naturally and overgenerous offsets and exemptions. I believe Garnaut has said the floor price should be $0, not $25 or whatever.

Apart from uncertain amounts I think there could also be complex rebound effects. Suppose a household's energy costs go up $1000 a year under ETS. If they get that back with other tax cuts they might then splurge on a home entertainment system. But that will increase demand for electricity which means generators will bid more for permits. And so on. Maybe the give-back should be restricted to selected items such as solar hot water services.

Some late nights ahead for the economic modellers.
Posted by Taswegian, Tuesday, 1 April 2008 12:11:32 PM
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Malcolm in his penultimate paragraph says:

The emissions trading system will open up a major new source of government revenue. If we were to invest much of the revenue earned from the ETS into removing inefficient and inequitable taxes we would not simply keep the tax share of GDP neutral, we would also be reinvesting those revenues into a more efficient and productive Australia.

Maybe that is the problem. Making Australia more efficient and productive in the context that Malcolm envisages may in fact increase global warming pressures.

I am not sure the idea of offsetting other taxes is the way forward. If say ETS raises $10 bn as Malcolm suggests, it may be we could regard that as some version of an hypothecated tax to be used to develop or support or seed green technologies. Indeed there may be an argument that instead of say $31bn in tax cuts (a return in fact of part of bracket creep) we could use that money for infrastructure, including public transport and other greener infrastructure. What for example would be the cost of gradually making public transport free?

And Malcolm doesn't address one of the other tax issues which i think will a rise as time goes on. According to the Treasury Tax Expenditures Statement we currently indirectly grant through the tax system (e.g. exemptions, offsets, accelerated deductions and so forth) $60bn per year, much of it to middle and upper income earners.

These tax expenditures escape rigorous examination because they are not direct expenditure.

A more rigorous approach to these tax expenditures could provide further billions for green infrastructure (eg solar in the centre, geothermal, tidal and so on. L'audace, l'audace, toujours l'audace.

Or carpe diem.
Posted by Passy, Wednesday, 2 April 2008 12:05:36 AM
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I totally support this proposal by Turnbull, it is the first proposal I have heard so far that makes any sense. Since our gas, electric, petrol bills will be increased by the amount the various companies must pay for the permits(plus a profit percentage) through the ETS, reducing the total business and personal tax bills by a comparable amount would make the greenhouse gas emissions abatement program effectively cost neutral to the average Australian. Over time the various emitters of greenhouse gases will reduce their emissions and thus be able to increase competitiveness and let normal market place pressures reduce costs. What happens to taxes when the ETS is not generating as much revenue though annual auctions? Well, do what governments know how to do best - raise the taxes again..... But in the mean time we will have had a relatively painless ride to a greener place to live
Posted by Bruce, Wednesday, 2 April 2008 8:00:10 AM
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Obsequious Turnbull's rant on climate change, carbon tax and other irrevelance's collectively brands him as a 'true-blue' apostle of the new face of JWH's - 'defunct-party-of-yesteryear'.

Shadow Treasurer,banker and silver-tail from the snotty-nose North Shore brigade, his low key blob doesn't exactly resonate on the hoi polloi in Lakemba, Inala or the Dandenong belt.

Frankly, it raises more questions than Dorothy Dix's " who dunnit" column. Pity Wayne Swan and Big Julie will have none of it. Simply because it lacks credibility. For that matter, Mums and Dads battler's, welfare recipients and disfranchised home-makers will give it the thumbs down once they cotton-on to the tongue-in-cheek message between the lines.

What are you really preaching Mal ? Are you advocating robbing the squattocracy to give to the improvished ? Or paying lip service to those with high mortages who are finding it increasing difficult to maintain their life-style, or first home buyers who can't raise the deposit, let alone service a grubby 30 year Bank loan ?

The much maligned Garnaut report has been thashed to smithereens umpteen times already, and as Climate Change Minister - Kuala Lumpur's expatriate Penny Wong readily conceded, is only a discussion paper.

Poor Prof Garnaut on reflection, probably wished he never got roped into the ordeal in the first place.

BTW,the Independent think-tank " Climate Institute " estimates the revenue raised from permit auctions could be as high as $ 20 billion a year - depending of course on fluctuations in carbon prices, inflation, estimate's committee, prevailing Government in Canberra etc, but not before 2012.

Meantime, we will continue to pollute the Globe,burn fossil fuels indiscrimately,clear our forests, accumulate wanton waste by the mile, drive our SUV's and importantly salve our conscience - not necessarily in that orde!

Most State's profit from Stamp duty - specially when we are experiencing a gargantuan Real Estate boom like no other. Property speculators, developers and investors are throwing caution to the winds and gambling with other people's money.

It's only the buyer who forks out initially, eventually recovered when he/she resells the property. No wonder prices
Posted by shellback, Wednesday, 9 April 2008 4:05:13 PM
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have hit the million dollar mark !

With Govt largesse - first Home buyer's grants, baby and maternity bonus's ( to double ) subsidised child care allowances etc..etc, can you see any abatement on the horizon ? The State's are still whinging about their entitilements of the GST bonanza. Ultimately, who is going to pay for the burgeoning infrastructure mess ? which the Fed's ( last 11 years )should have addressed and shamefully didn't.

Nefarious, and other hidden taxes is the product of ' stealth 'by Government. In Oz, the tax burden isn't equally shared, particularly the low income earners. Frank Packer took a Parliamentary Inquiry to task when asked what fool would not minimise tax ? The off-shore Tax haven's are booming with Australia Zoo, GGCC, top-end bookies, numerous high-flyers are evading tax with impunity. It's always been a growth industry and any Accountant will offer you dozen's of alternatives to forfeit paying legitimate tax. Money laundering and the ' black ' cash economy isn't a taboo-restriction-anathema, when the butcher, baker and candlestick maker, have a finger in the pie.

Watch-dog, ACCC's latest venture into fuel pricing conveniently overlooks the excise tax which is still 30 plus cents a litre, and proportionately 30% of every weekly rise.

Woebegone Kevin & Co still get their bite at the cherry, come what may.

As for the other inquiry into Supermarts, the GST extends from the market gardener, to transport, warehouse and retailer to the battling housewife consumer. Triple whammy indeed. Graham Samuel's is looking for a scape-goat, but he wont find it, because the Giant Corporations are the largest donor's to Political parties. Business as usual. Just peek into the AEC's website.

Turnbull states $ 11 billion is raised garnishing stamp duty alone. Disgraceful, but he never complained when the Remuneration Tribunal guaranteed departing pollies generous superannuantion hand-shakes that is the envy of Western Democracies worldwide.

Take a tip - cleanup your own backyard first and foremost !

Give us a break !!
Posted by shellback, Wednesday, 9 April 2008 4:36:28 PM
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