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How Does Carbon Tax Affect Australian Economy

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Introduction Due to an increasing concern of global warming, many governments worldwide have chosen to intervene to protect the environment(Bruvoll &Larsen,2002:3). A solution to this growing concern is to implement a emissions tax schemes. These schemes work by raising the monetary cost of producing and consuming fossil fuels, thus causing a decrease in usage of these fossil fuels which subsequently lowers the emissions released into the atmosphere(Arlinghaus J, 2016:28). However the implementation of a emissions tax scheme affect is not limited to the environment. The tax scheme also effects the standard of living of citizens, the financial well-being of firms and the economy. Theory of carbon tax A carbon tax is introduced to curb the short …show more content…

Firstly the tax caused a substantial increase in the price for electricity for consumers. Due to the fact that transport was less regressive consumers had to just bare with the increase in the price of commuting via carbon based energy. These increases in the cost of living led to a decrease in disposal income and a general decrease in the standard of living. Secondly the firms endured a increase in energy input cost which of which they had to carry the majority of the increase in taxes at 70%. Thus also deceasing the profits of firms. Thirdly The net effect of the carbon tax on the Australian economy was a decrease in GDP. Lastly A carbon which is implemented correct can curb the emissions released into the atmosphere thus leading to reduced congestion and improved health(can we afford carbon tax). The Revenue for the Carbon tax caused also be used to redistribute wealth. This could be achieved by paying larger percentage rebates to the poor. Furthermore a percentage of the overall revenue could be allocated to invest into researching alternative energy sources. Thus creating job opportunities and new technologies which could make the economy better off in the long

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