The Carbon Tax – My Take On It

It is very interesting that the Carbon Tax is creating so much debate at present. Is this because it is a new tax, that people don’t believe in climate change or is it that Julia Gillard said we wouldn’t have a Carbon Tax? (On the last issue isn’t funny how short our memories are because John Howard said we wouldn’t have a Goods and Services Tax (GST) but that slipped in didn’t it! Oh and wasn’t Tony Abbott for a carbon tax a few years ago or has he forgotten that).

However I think there is a point that is being lost here and that is the impact that this tax will have on the environment that we all share. The Carbon Tax (which I will shorten to CT from here on in) is aimed at as I see it, two things. One is to make those that are the greatest polluters pay for that pollution and secondly to start to address the issue of global warming in the future. Not now but 10+ years.

Firstly the polluters of the atmosphere, which is technically all of us as consumers, as we want the goods and services that are being produced or the power to run the goods and services that we want, desire, need or require. The issue around the carbon dioxide polluters is that they are generating a large proportion of the Greenhouse Gasses (GHG) that are aiding in the warming of the planet. We as consumers are feeding that through our consumption needs. Many if not all of goods and services that we utilise come to us at a cost which is usually unrealistically low as a result of the market mechanisms of supply and production. (I am not an economist so this is basic stuff if I remember rightly). The price of goods doesn’t often encompass fully the management of waste generated by the production process. The pollution of the air, water and land and the removal of raw materials is undertaken usually in an unsustainable manner and when that resource is depleted we move on. The management of the pollution or damage is not something that a company will often do willingly, but usually undertakes out of legislative requirement or community pressure, as any additional imposed cost will impact their bottom line and thus for larger companies the share price and the share holder. The resultant pollution, environmental damage, repatriation etc then usually falls to the government or community to manage. The cost of production is therefore not really the true cost of production as all the elements are not taken into consideration.

I found the short video called from the Story of Stuff website very interesting and put things into an easy to digest video on the cost of production. It can be found at Story of Stuff or on YouTube at Story of Stuff YouTube

What I understand the CT to do is to place a cost on the amount of carbon that a company emits. This has a two fold effect. Companies if they are paying a large amount for the carbon they emit may find that the use of alternative technologies become more affordable as the price increases and so does their tax bill. Thus they can reduce their tax through utilising alternative technologies that are less polluting. From an economic point of view this initially will result in price increases which is going part way to showing what the true cost of production is (subsidies not included). There may also be a shift in technologies and industries towards more greener production and industries which will more than offset the losses in less green or polluting industries.

From the environmental perspective it is hoped that through the CT that the amount of Carbon Dioxide in the atmosphere will decline over the next coming decades. The hope being that the increased cost which will make companies less profitable or competitive with companies that are greener (used loosely) will result in those higher polluting companies seeking to change their ways to improve their processes and reduce their carbon output.

From an individuals perspective there is likely to be a small increase in the cost of goods and service as a result of the CT but this increase is the start of seeing the true cost of production and although this may hurt the hip pocket there are many ways to reduce that impact. I am not about to go into them now but many of the sustainable practices such as turning off electronic devices when not in use can have significant impacts. Sustainability Victoria’s website has some useful tips for business and families.

In the long run the environment will benefit from the reduction in carbon dioxide and so will we. We cannot sustain the current increase in carbon dioxide and live to tell it. At least not long term. Whether we like it or not the environment that we all enjoy is all we have and although it will survive it may not be as we know it or with us in it if we don’t all help to make a difference. This is a cumulative call to action. Your actions may seem small but 7 billion people doing the same thing is a big change.

It is a small cost to pay now for a better future as the costs and impacts of not doing something will be greater as time go on.

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