Carbon Tax: A loser for Australia — lesson for U.S.!

On July 1, 2012 the Australian government enacted a $23 (Australian dollars) per ton tax on greenhouse gases on a CO2 equivalent basis.  This tax rose to  $24.15/ton on July 1, 2013. At the behest of the Institute of Energy Research, Dr. Alex Robson, an economics professor from Griffith University in Brisbane, Australia, has written an instructive new study  with lessons for U.S. and other policymakers.

The results were not surprising.  As I’ve argued across a number of publications, carbon taxes are bound to inhibit growth, costs jobs, the taxpayers and have a negative effect on government revenue.  A carbon tax may, overtime if it is high enough, make a country carbon neutral, but only at the expense of impoverishing the nation that enacts it.

The numbers from Australia bear out my arguments.  Among the study’s findings:

  • ·         In the year after Australia’s carbon tax was introduced, household electricity prices rose 15%, including the biggest quarterly increase on record.
  • ·         Currently 19% of the typical household’s electricity bill is due to Australia’s carbon tax and other “green” programs such as a renewable energy mandate.
  • ·         Before the carbon tax, Australia’s unemployment had held steady, fluctuating between 620,000 and 640,000, but since July 2012 the number of unemployed workers in Australia has risen by more than 10 per cent, from 636,564 to 705,421, with the unemployment rate rising from 5.2 per cent to 5.7 per cent over the same period.
  • ·         A negative fiscal impact of more than $4 billion in 2015.
  • ·         Ironically, carbon emissions spiked after the cap was put in place and are higher now that any time in history.

And the numbers just get worse in future years.

This report is worth reading in full, especially for anyone who thinks a carbon tax is a viable approach dealing with the risks posed by carbon dioxide emissions.

Comments (13)

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  1. David says:

    If the US were to follow this system, and cap their trade. Where is the guarantee that other developed nations will as well? In order to remain competitive we must encourage growth and maximize output. Carbon taxing is not the way to do so.

  2. Joe Barnett says:

    No country that has adopted a carbon tax has eliminated subsidies, tax credits and mandates for so-called green energy. I suspect that if it a country did so, a carbon tax would encourage more efficient use of fossil fuels and greater energy conservation spending, rather than a shift to solar, wind, etc.

  3. JD says:

    “A carbon tax may, overtime if it is high enough, make a country carbon neutral, but only at the expense of impoverishing the nation that enacts it.”

    This is an important point that common people overlook.

    • Dewaine says:

      Every time I get into a discussion about global warming I make sure to drop that bomb on people. We need to realize that this isn’t a choice between “destroying the planet” or “saving the planet”, it is “destroying the planet” or “destroying humanity”.

    • Lloyd says:

      Not many countries can afford to take that chance. Tough call for anyone that imposes that tax.

  4. CRS says:

    So the Australian govenment imposed carbon tax is as big a failure as their government imposed gun control.
    Surprise, surprise!
    How many times does this information have to be shown to politicians to convince them to stop the foolishness?

    • JD says:

      They are driven by the idea that they are just doing it the wrong way. They don’t think that intervention in the market is inherently bad.

      • Dewaine says:

        Exactly. That is why the insanity will continue. They think that gravity won’t pull them to the ground if they jump off a cliff in a different direction.

      • Paige says:

        I hope sooner, rather than later, politicians will learn that the more policy that is placed on the generators of tax revenue, the less revenue there is to tax.

        Instead of taxing all carbon usage, tax only if a company generates X amount of CO2. A penalty tax if you will.

  5. VN says:

    Every time you actually look at the numbers, cost, and effects of global warming-type legislation, you get results like this – it’s ineffective, expensive, and entirely unnecessary.

  6. Joe Barnett says:

    The good news from Australia, of course, is that conservative Tony Abbot, the new prime minister, has pledged to repeal the carbon tax, and it looks like he will have the votes in both the House and Senate to do so. “… A very early item of business is scrapping the carbon tax,” he said Sunday. Good for him!

  7. F. Swemson says:

    Interesting …. BUT…

    The article fails to mention the main reason why we shouldn’t adopt a so called “carbon tax” is that CO2 is not CARBON… Calling CO2 carbon is like calling H20 hydrogen….

    There is no climate change crisis. CO2 is a beneficial trace gas that all living things need in order to grow. See: http://www.youtube.com/watch?v=P2qVNK6zFgE

    There’s one other reason that everyone fails to recognize, and that’s the fact that

    WARMING IS GOOD !

    The only kind of climate change we should be worried about is extreme cooling, and we’re about to get some of that over the next few decades… perhaps even a longer cooling period than we had in the 1940’s thru the 1970’s.

    CO2 levels have virtually no influence on climate change….

    IT’S THE SUN STUPID !

    fs

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