Effects on Australias Firms and Industries by Carbon Tax - Case Study Example

EFFECTS ON THE AUSTRALIA’S FIRMS AND INDUSTRIES BY CARBON TAX Name: Institute: Instructor: Date: Introduction In Australia it is well recognized that there is high global warming due to many greenhouse and the lawmakers have decided to reduce the gas emitted in the greenhouse through negotiation. Some of the suggestions were on fossil fuels or carbon emission taxation. The main aim for suggesting the carbon taxation was to reduce the effects as stated in Charles Hills’ book are generally caused by the fossil fuels to the environment through combustion. The emissions are harmful because they cause global climate change, acid rain, ground level ozone and many other problems. However, carbon tax has already become a main option for reducing carbon emissions in terms of market (E. K. Hunt, 2008). The carbon tax is highly preferred by consumers and economists because it is fare and simple of which it is different with the politicians. Another primary work for carbon tax is reduction of emissions of the greenhouse-gas whereby it is done through charging a specific fee on fossil fuels which is generalized on the amount of carbon emitted when fossil fuels are burned thus reducing the utilities, business, fees and personal attempts of using fossil fuels little energy. However, there are many other advantages which the country will benefit with if the carbon emission strategy is kept high (Garnaut, 2011). What is tag carbon tax? There has been an advice to the Australian government by the scientists that they should create a tax on carbon emissions because as I have read in Charles book that if it continues to be emitted without control there will be a great effect on the country especially because of the increase in temperatures. There is a high risk to the country’s economy and its environment unlike the developed countries because the normal country’s weather is always hot and dry hence should experience more lose in climate change (Brian Dawson, 2008). The feeling of the scientist is that the release of the carbon is due to human activities thus polluting the atmosphere hence the government has decided to come up with the criteria of cleaning the energy for Australians future. The plan is to reduce pollution by investing it thus ensuring that there is prosperity in Australia’s future. The government has decided to introduce prices on carbon emissions in the country and its economy. This is done through assigning a price tag on every polluted tone of carbon which is highly released by the largest polluters in the atmosphere. However, there will be involvement of other great businesses in the payment of the carbon tax (Qipeng P. Zheng, 2012). Financial incentives will be created through the carbon tax that will help reduce the flow of carbon pollution through the country’s economy. However, the households suffer the payments of the carbon tax since they are indirectly charged with these taxes whereby it is cut from their benefits and pensions increase hence helping the businesses pay the taxes. There will also be an encouragement on the investment sector because of the change of generation of Australia’s electricity thus some of the energies will be easily renewed such as the solar and wind power and also the cleaner gas use such as the natural gas (Pearse, 2009). Charles Hill claims that treasury modeling is due to carbon price there will be a great economy growth which will be continuous. There has been a demonstration of market mechanisms by the independent institutes like the productivity commissions and the economist that these carbon Levis and the emission trading systems are among the cheapest pollution reduction ways (John Creedy, 2006). However, He further goes on to say that as there happens to be transformation in the economy the Australian government is willing to support with creating other job opportunities in all types of industries such as the coal mining, steel and the food processing industries. A lot is needed to be done in order to ensure wise use of the available resources since Australia has renewable energy resources which are boundless. The target of the country in terms of renewing the energy is to deliver investments of around 20 billion dollars before 2020 from today while the carbon prices are inclusive (Garnaut, 2011) This will indicate that above 20 percent of the electricity in Australia will originate from the sources which are renewable (Qipeng P. Zheng, 2012). However, since the world is moving, some of the dragging countries in cleaning up will fall because they all have in their hands the cheapest ways of tackling the climate change which is through carbon taxing. At different levels of consumption and production carbon tax is levied whereby the target of some of the taxes is based on the chain of supply meaning the producer’s transactions of oil wellheads and coal mines in conjunction with suppliers such as oil refiners and coal shippers. Other taxes may include direct consumer charges involving electric bills (Dieter Helm, 2009). Various carbon taxes, both theoretical and real, support implementation varying points. Tax on consumption is easier than tax on production. Consumers are always willing to give an extra amount a year on carbon tax whereas producers are not. Production taxes are normally economically disruptive making more expense on domestic energy compared to foreign imports (Pearse, 2009). This is the reason why accessible carbon taxes aim consumers in Australia oil and energy companies. The good point at the carbon tax The good things about the carbon tax are as follow; Charles Hill says that Australia would reduce foreign energy sources dependence through renewing of resources of energy by enhancing conservation of incentives by better markets and availability of goods which are efficient in energy production (Education, 2006). Charles Hill explains that there would rise up an innovation in energy saving technologies developments and research sectors which are new and private and also help in bringing together the renewable energy if the price signals would permanently change from making the carbon tax to be active. The carbon tax implications also provide chances for reforms and reduction of spending which is centralized on other programs which are related to energy (John Creedy, 2006). Secondly, Charles Hills’ Book indicates that Carbon tax is cost competitive because it competes with cheap fuels hence it encourages alternative energy. However, taxes on coal increase as per British thermal unit since it is inexpensive and plentiful hence its price can be compared to the cleaner power forms. The industry heat energy is measured in British thermal unit which is a standard measure hence the necessary energy to increase the temperature from one water pound to one degree Fahrenheit is one British thermal unit (E. K. Hunt, 2008). Thirdly, He has said that through taxation a lot of money is raised and this money benefits the society through many ways. Some of the benefits attained through taxation are that it can be issued in form of a rebate it can help in subsidizing the environmental programs (Pearse, 2009). Majority of the people who consider progressive tax-shifting they like the carbon tax therefore there would be a shift of the persons burdened with the tax away from state sale tax and national income tax. It is easy to predict hence economists like it. There can be fluctuation of prices because of change in economic conditions and also the prevailing weather when carbon is under the schemes of cap-and-trade. However, this type of scheme causes fluctuation because the prices on carbon are normally set such that they are not definite and the emissions are definitely limited (Education, 2006). Charles Hill has given stability in carbon tax is another good thing in taxation sector. The stability would enable utilities and businesses to know the carbon price and its end result. They could increase energy efficiency through investing the alternative energy which was based on the knowledge of investment (Brian Dawson, 2008). Carbon tax is well and easily understood because they only need to be explained of how this tax operates, what they are required to do in order to keep it high, and they have a clear reason of why they are taxed. Another good thing about carbon tax is Australia is that it is straightforward enough because the use taxed amount of money can easily be explained according to the explanations of Charles Hill. What are the bad points? The bad outcomes of the carbon tax are explained in Charles Hills’ book as follows: The non supporters of carbon tax in Australia have an argument that they have a fear of the economy of the country being negatively interfered with due to the little which is being done in order to reduce the carbon emitted and its level reduction. He has said that in this case the value of the permanent price signal which is based on research and development is understated and also the value of emissions in the environment for reduction that would arise from the act of Australia (Dieter Helm, 2009). Other countries experience is reduced especially those which have created carbon taxes unilaterally. This happens because significant payment of price is not evidently shown or even payment of any price in terms of growth in economy. Australia as a country among the small ones should be able to follow the steps or way adopted by the leading countries in emission of carbon in case of an action of limiting carbon emissions which is multilateral. (Garnaut, 2011) Another of the negative aspects as stated by Charles Hill concerning the carbon tax is that it is regressive and this is because of the more spend of money to attain energy by those who earn low income than those who earn a lot of incomes. However, in order the problem can be reduced there should be a carbon tax revenues rebate whereby the income tax credits are refundable or the payroll tax which is refundable (Pearse, 2009). Due to some of the challenges in the carbon tax an individual may decide to start using the compact florescent lamps thus dumping the incandescent bulbs thus switching from private to public transportation. Through heating and cooling system or installation of new appliances the energy efficiencies in businesses might increase. Some of the utility companies use gasification, wet scrubbers or the low burners thus reducing the company emissions. Since the set carbon tax price on carbon is definite there is assurance of outcome of efficient investments which are expensive (John Creedy, 2006). Carbon tax is a continued expense hence in Australian families it is seen as a burden to them because they all pay the taxes indirectly and directly and it is payable per household as we refer to the book written by Charles hill. However, there is also the additional tax which is indirectly paid through an increase of price of every commodity which is passed to each and every consumer (Qipeng P. Zheng, 2012). However, both sides have agreed on the additional tax payment and there will be compensation which is considerable whereby a certain number of Australian households which is up to ninety percent will be paid. For assistance from businesses there will be financial aid (Hill, International Business : Competing in the Global Marketplace , 2012). An addition to the disadvantages of the carbon is that there is a feeling among the economists that the local manufactured products will turn out to be expensive than imported goods due to the taxes thus creating unfavorable conditions to the local companies due to the competition that arises between them (Garnaut, 2011). Lastly, Charles opposite argument is that there will be a high negative effect on the coal and mining industries in Australia which greatly provide employment to the jobless identities. In addition, there will be possibility of a number of citizens in Australia losing their jobs due to the high effect of carbon taxes to the economy (E. K. Hunt, 2008). However, there will be also some job creation because the renewable energy markets will emerge thus the gas industry which is poorly active or very old in the industrial areas is being cleaned up by the government hence it gradually takes over the current position and occupation of the coal mining. Evaluation of carbon tax There many disbelievers’ arguments that if carbon emissions are assigned some prices there would be a great effect on the economy since majority of them think of the failure of the market. However, according to what I have read in this book of Charles Hill I can strongly say that the arguments are not observing the importance of the carbon tax but they are only based on the costs incurred in carbon pricing (Brian Dawson, 2008). Despite the negative effects of the carbon tax it is a good idea because through it the harmful gas it is reduced in the atmosphere hence the acid rains, global warming and other many carbon emissions outcomes are reduced leading to better environments. It is also good because it will create jobs for the jobless. References Brian Dawson, M. S. (2008). The Complete Guide to Climate Change. NY: Routledge. Dieter Helm, C. H. (2009). The Economics and Politics of Climate Change. Oxford: Oxford University Press,. E. K. Hunt, R. F. (2008). An Introduction to Traditional and Progressive Views. Canada: M.E. Sharpe,. Education, N. C. (2006). Energy, Economics, and the Environment. US: Council for Economic Educat,. Garnaut, R. (2011). The Garnaut Review 2011: Australia in the Global Response to Climate Change. USA: Cambridge University Press. Hill, C. W. (2012). International Business : Competing in the Global Marketplace . US: McGraw-Hill Higher Education. Hill, C. W. (2011). International business: competing in the global marketplace. USA: Irwin/McGraw-Hill,. John Creedy, C. S. (2006). The Distributional Effects of Indirect Taxes: Models And Applications from New Zealand. New Zealand: Edward Elgar Publishing,. l'économie, T. r. (2009). Carbon Emissions Pricing Policy. canada: National Round Table. Pearse, G. (2009). Quarry Vision: Coal, Climate Change and the End of the Resources Boom. UK: Black Inc. Qipeng P. Zheng, S. R. (2012). Handbook of CO s in power systems. Berlin,: Springer, . Sandy Streeter, T. L. (2010). The Kyoto Protocol, Greenhouse Gas (GHG) Emissions, Carbon Tax, Emission Allowances,. Austrelia: The Capitol Net Inc,. Read More