Understanding our carbon tax
October 12, 2011, 11:08 am Yahoo!7
It's time to move past the political spin and business-backed advertising and understand what the new carbon tax means for you.
As the Gillard government secured passage of its controversial carbon tax through the lower house of federal parliament this morning, it's time for us to prepare for a future with the hotly-contested new carbon tax.
Cut through the political spin and business-backed advertising and understand what the carbon tax means for you. (More From Yahoo!7 Finance: How To Beat The Carbon Tax)
What is a carbon tax?
A carbon tax is a tax on energy sources which emit carbon dioxide. It's essentially a pollution tax.
Who will be taxed?
The tax, aimed at our biggest carbon polluters, will hit about 500 of our largest businesses. That's companies such as Macquarie Generation Australia and Bluescope Steel. The mining and manufacturing sectors will be most affected by the carbon tax. (More From Yahoo!7 Finance: Gillard, Rudd Celebrate As Carbon Bills Pass)
How much is the carbon tax?
Starting from next July, companies will have to pay $23 for every tonne of carbon they emit into the atmosphere – the government hopes this will encourage them to find green alternatives.
The carbon tax is designed to increase 2.5 per cent every year, for the next three years. On July 1, 2013 the tax will be raised to $24.5 per tonne, and then to $25.40 on July 1, 2014.
Is the government protecting jobs in high-polluting companies?
More than $9 billion has been earmarked to help protect jobs in high carbon-polluting companies. For example, $1.3 billion will go towards a coal sector package, while $300 million has been set aside to help the steel industry move to cleaner solutions. Aluminium, cement, and zinc manufacturers are other industries that will be get government support.
Farmers will not have to pay the carbon tax but will get credits for each tonne of carbon pollution which can be stored on their land. (More From Yahoo!7 Finance: Big Business Launches New Carbon Tax Challenge)
Will households be affected by the carbon tax?
Yes, the carbon tax will push up the price of food, power and other basics but everyday Australians will be compensated through tax cuts, allowances and payments.
It is estimated that about 8 million households will get some help. There are to be two rounds of tax cuts and increases in allowances, payments and benefits. Average household costs are expected to rise by $9.90 per week but the Government will offset this with average compensation of $10.10 per week. (More From Yahoo!7 Finance: Carbon Tax Overview)
Until the carbon tax is actually in place it won't become clear whether the average Australian will be better off or not under a carbon tax.
Is Australia going it alone?
Not really. New Zealand's Emission Trading Scheme started last year, and European countries have had similar schemes since 2005. Parts of the US and Canada have similar schemes. India has recently introduced a tax on coal in an effort to reduce emissions and China is considering a carbon tax for either next year or 2013. Once the emissions trading scheme starts in 2015, there will be scope to link Australia's system into international carbon markets.
What will the carbon tax change?
The Government says that 159m tonnes of carbon will be cut every year. This is roughly the equivalent of taking more than 45 million cars off the road.
The Government hopes that the tax will unleash billions of dollars of investment and innovation into renewable energy, and steer Australian industries away from high polluting energy sources. (More From Yahoo!7 Finance: Countries With The Highest Taxes)
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