ETS/Carbon tax ?

[Berkeley_Eagle]

can anyone explain why we need this ?
the government is today discussing a carbon tax price I just heard

 

[Dan]

revenue raising.

Basically in a nutshell it is a way of offering financial incentive to stop polluting.

Tax emissions past a certain point, therefore forcing business to either pay to pollute more or cut back and save money

 

[Fro]

Its Busy work.

Meakes them seem to be doing something, in the grand scheme of things if the big polluters and big business dont get on board nothing will be achieved.

It's an international issue and all that is going to achieve is make Aus taxpayers hurt more.

 

[The Gronk]

ETS and carbon tax are totally different:

Carbon tax - you can pollute as much as you want, just costs more.  Aim is that the added cost encourages less pollution. 

ETS - set a cap on total pollution allowed nationwide.  People then bid for licences to pollute a fraction of the cap, with a minimum bid being set.  More complicated, but allows for tighter control.  Lowering the cap size or raising the minimum bid can push things along. 


Its true its on a bigger scale than just Australia, but basically developed countries need to lead in order for others to come along. 

One thing no one thinks of is that if we start cleaning up before others, our expertise in doing this can then be sold on to other countries down the track. 

 

[Fro]

And that Dr. Gronk is why politicians are dumb, because the people smart enough to come up with these ideas arent stupid enough to go into politics.

Good idea is what I'm saying.

 

[CussCuss]

Good idea, potential to be manipulated if its a free market 🙁

Read up on how its going in a practial application here http://en.wikipedia.org/wiki/European_Union_Emission_Trading_Scheme

 

[The Gronk]

And that Dr. Gronk is why politicians are dumb, because the people smart enough to come up with these ideas arent stupid enough to go into politics.

Good idea is what I'm saying.

Well to their credit we were a bee's dick from getting started with a scheme.  Sure it would have been ineffectual, but everyone knows you start at the bottom and work up from there. 

 

[OneEyedEagle]

Good idea, potential to be manipulated if its a free market 🙁

Read up on how its going in a practial application here http://en.wikipedia.org/wiki/European_Union_Emission_Trading_Scheme

Anything in the sense that can raise revenue for the incumbent government will most certainly be manipulated to screw the public for even more cash

I don't see it being a good thing.

 

[SeaEagleRock8]

Seeing as how we are discussing politics, can anyone explain why we have our troops in Afghanistan? (please don't say the war against terror)

 

[Rusty]

Here is the problem with a Carbon Tax, or an ETS for that matter.

Firstly it is ineffective, taxing carbon polluters is intended to encourage people to seek less destructive alternatives, this is only effective if there is less destructive alternatives. 90% of the carbon tax will be leveled on energy production and fright, the first of which is unlikely to improve without huge government spending, the second is unlikely to improve because the cost of transporting green is far too high and the idea of buying local is difficult if not impossible to implement is such a big country. If either are introduced they must be coupled with incentive programs to develop alternatives. In fact as a small economy and polluter in the scheme of things as a global impact we would be much better off concentrating on developing green solutions which would then be marketable. This can be done using incentives, grants and focused government infrastructure spending.

Secondly and most importantly, and if you walk away with nothing else take this down - an ETS/Carbon tax is regressive. That is it costs more the lower your income is.

This may sound odd, so I will show some simple sums, using an example carbon tax of 10%.

At an income of 1million a year you spend 10% of your income on physical goods, which on average are now 10% more expensive. This means the impact on you in 1% of your overall income.

On an income of 40000, you might spend 50% of your income on physical goods (Food, Electricity, Fuel etc) which means the impact is now 5%.

The less surplus income you have, or income that you invest or use to buy non-physical goods the higher the real impact of a carbon tax on you.

The GST has the same drawback, the only saving grace for the GST is that it excludes food and basic necessities which is vital.

Basically the rich will pollute under this system (Because they can afford it, and the cost of polluting is not high so it wont deter them) and the poor will pay. To make a carbon tax work it needs to be effectively high, the problem is that the higher you make it the more people it pushes below the poverty line.

Conclusion : If you want to solve the carbon problem, raise everyones income tax by a fair amount and spend the new income on finding solutions / providing tax breaks for those who provide lower carbon alternatives.

I have other ideas but this post is long without them.

 

[The Gronk]

There will be compensations to level out any inequalities. 

You're thinking about this backwards - raising the price based on pollution allows other cleaner options to become competitive, and eventually cheaper. 

Raising taxes and just spending it is usually a less efficient way of finding solutions, especially when the right option is not clear.  I'm amused to find liberal supporters arguing for a tax and spend policy. 

 

[ManlyBacker]

Rusty, your examples just don't equate. Rich people own bigger houses, have to provide power to light and heat and cool them, run bigger swimming pools etc; own more than one car and they are usually more expensive; own boats, take holidays using planes, travel further, stay in better and larger accomodation, and buy more household and other goods and entertain on a more lavish scale. Therefore their costs under either a GST or ETS/Carbon Tax will be greater than for someone who doesn't spend as much. If you just put a line through the very basic staples that everyone needs then it looks like that, and as Gronk says there is usually an allowance for that, but in reality it is equalised by expenditure and lifestyle.

 

[CussCuss]

Elasticity of carbon... hrm, i would bet it would be <1, but probably not much which does make it regressive.

Anything that puts the impact of a government controlled tax/scheme whatever into private hands is not going to end well, you will end up with consumers getting a big hike, probably bigger than what it actually cost the companies. Actually it will definitely go down that way, look at what happened with the 'alcopops tax' (which was actually a closing of a loophole and the retailers have a ****ing huuuuge margin on them anyway) which didnt even go through!

I think a much better way to go about this would be to subsidise green tech/power generation. It will be a positive thing (i.e creating jobs, innovation etc) and can be directed and controlled fairly easily.

Something simple like setting up government schools on solar power, how hard is that for a start?

 

[The Gronk]

Alternative energies are not ready to go off the shelf - picking winners inevitably leads to going down the wrong path. 

The technologies need the chance to find the best niche usage, not have some bureaucrat decide that solar energy is the way to go.  At any rate there are about 4-5 versions of solar energy - we don't yet know which one will be the eventual large scale provider. 

 

[Rusty]

Rusty, your examples just don't equate. Rich people own bigger houses, have to provide power to light and heat and cool them, run bigger swimming pools etc; own more than one car and they are usually more expensive; own boats, take holidays using planes, travel further, stay in better and larger accomodation, and buy more household and other goods and entertain on a more lavish scale. Therefore their costs under either a GST or ETS/Carbon Tax will be greater than for someone who doesn't spend as much. If you just put a line through the very basic staples that everyone needs then it looks like that, and as Gronk says there is usually an allowance for that, but in reality it is equalised by expenditure and lifestyle.

Yes 'Rich' people do have a higher material spend then poor people, the issue is not the overall amount of tax paid rather the overall impact on your lifestyle. Rich people spend a much smaller portion of income on necessities, in fact poor people often spend 100%, this means any tax that increases the price of necessities will result in a bigger impact on the poor.

Also if you put a line through the basic items, food and electricity lets say then the impact of the tax goes down, to the point where it is almost meaningless. The GST could do this because it was a revenue raising device, a Carbon tax is meant to change behavior, every time you add an exception it loses its edge, every bit of edge you give it more people slip into poverty.

By the way, I hate being labeled a Lib supporter in the sense that it should sum up my politics as a whole and limit me to one set of two dimensional ideas. I am big on social justice and the idea that we should as a wealthy society be finding ways to pull our neediest our of poverty not put more of them there.

Another argument that runs against this policy is how it would be implemented in regards to imports. We tax everything on the carbon created a point of production, due to electricity costs, however international goods do not have this tax on base production, hence a disadvantage to Australian made goods. Do we then estimate how much electricity and other factors go into the production of imports? Sounds a bit add-hoc to me.

 

[ManlyBacker]

[quote author=ManlyBacker link=topic=185709.msg302182#msg302182 date=1286915463]
Rusty, your examples just don't equate. Rich people own bigger houses, have to provide power to light and heat and cool them, run bigger swimming pools etc; own more than one car and they are usually more expensive; own boats, take holidays using planes, travel further, stay in better and larger accomodation, and buy more household and other goods and entertain on a more lavish scale. Therefore their costs under either a GST or ETS/Carbon Tax will be greater than for someone who doesn't spend as much. If you just put a line through the very basic staples that everyone needs then it looks like that, and as Gronk says there is usually an allowance for that, but in reality it is equalised by expenditure and lifestyle.

Yes 'Rich' people do have a higher material spend then poor people, the issue is not the overall amount of tax paid rather the overall impact on your lifestyle. Rich people spend a much smaller portion of income on necessities, in fact poor people often spend 100%, this means any tax that increases the price of necessities will result in a bigger impact on the poor.
[/quote]
As Gronk says you usually find that governments will make allowances for that, by either raising the tax threshold or by giving a tax deduction or other 'incentive' (for want of a better word) to even this disparity out. The tax system is full of these. From the perspective of tackling the greater users at a higher cost point or in the case of GST actually collecting tax from the black economy at most points of expenditure then these work.

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Also if you put a line through the basic items, food and electricity lets say then the impact of the tax goes down, to the point where it is almost meaningless. The GST could do this because it was a revenue raising device, a Carbon tax is meant to change behavior, every time you add an exception it loses its edge, every bit of edge you give it more people slip into poverty.

That is valid and part of the cost problem with implementing a societal change without hurting the most disadvantaged. I had the same feelings about the GST and removing so-called 'staples'. That was a poor move. I always favour a tax that affects flatly to strengthen the issue you are trying to fix (e.g. no tax being paid by 'black' operators by a GST on everything, or a flat tax on actual carbon 'costs' where the real users are forced to pay where their decisions are made). They may not be palatable but to effect change the users or abusers need to cough up.

That brings up the valid point that Gronk made. What choices are available for the disadvantaged to change the way they purchase power? A lot more thought needs to be given to the incentives provided for alternative greener solutions and how they are delivered.

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By the way, I hate being labeled a Lib supporter in the sense that it should sum up my politics as a whole and limit me to one set of two dimensional ideas. I am big on social justice and the idea that we should as a wealthy society be finding ways to pull our neediest our of poverty not put more of them there.

No probs from me with your political leanings or social justice. However the needy being pulled out of poverty doesn't stop the concept that when something is wrong , it is wrong. To effect meaningful change means that the end result achieves that, not that we made it all too easy to continue with what we are doing because it hurts. I'm no expert on the ETS and what should be done but that strikes me as a truism. The question is what alternatives are in place.

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Another argument that runs against this policy is how it would be implemented in regards to imports. We tax everything on the carbon created a point of production, due to electricity costs, however international goods do not have this tax on base production, hence a disadvantage to Australian made goods. Do we then estimate how much electricity and other factors go into the production of imports? Sounds a bit add-hoc to me.

Another valid problem. That is an area I do have a lot of experience with. Tariff duties is one way to control it but as you possibly intimate a minefield for arguing lawyers for importers and also for public servants to administer. Part of the reason why agreements at Copenhagen could have made a difference. If we can measure fat content in food then there could be a global agreement on carbon usage to create. This is completely different to an established ETS which would result in country variances. However, that may be fairer when making allowances for developing countries which might be given some form of leeway. It is bloody hard - no doubt about it.

 

[OneEyedEagle]

Imposing an ETS will ultimately find its way to the general public in the form of higher prices in goods and services and essential amenities, thus ETS = more GST revenue for the government coffers.

The first sheila Gizzard has to find some way of paying for the promises that she made to (I hate the world - Bob Brown)

 

[CussCuss]

Alternative energies are not ready to go off the shelf - picking winners inevitably leads to going down the wrong path. 

The technologies need the chance to find the best niche usage, not have some bureaucrat decide that solar energy is the way to go.  At any rate there are about 4-5 versions of solar energy - we don't yet know which one will be the eventual large scale provider. 

Wtf, yes they are. You can go out and buy a solar systems from any number of providers. http://www.solarpower-brisbane.com.au/solar-power/index.htm for example.

Who says you have to pick 1 particular thing? You can subsidise green energy, wind, geo, solar PV, solar towers. You arent going to have any progress by waiting around, not spending a cent on any kind of green energy and expecting a market to develop because maybe one day we will decide to use it.

If you make a market for it, they will come and the bigger the market, the bigger the $$$ invested and the bigger the progress.

 

[The Gronk]

[quote author=The Gronk link=topic=185709.msg302203#msg302203 date=1286928882]
Alternative energies are not ready to go off the shelf - picking winners inevitably leads to going down the wrong path. 

The technologies need the chance to find the best niche usage, not have some bureaucrat decide that solar energy is the way to go.  At any rate there are about 4-5 versions of solar energy - we don't yet know which one will be the eventual large scale provider. 

Wtf, yes they are. You can go out and buy a solar systems from any number of providers. http://www.solarpower-brisbane.com.au/solar-power/index.htm for example.

Who says you have to pick 1 particular thing? You can subsidise green energy, wind, geo, solar PV, solar towers. You arent going to have any progress by waiting around, not spending a cent on any kind of green energy and expecting a market to develop because maybe one day we will decide to use it.

If you make a market for it, they will come and the bigger the market, the bigger the $$$ invested and the bigger the progress.
[/quote]

Maybe you could try getting informed about alternative energy first.  There is a massive difference between niche power sources and baseload, non-intermittent supply. 

You need to make a market for alternative energy in general, not try to pick which of the ~2 dozen options is going to be the one that is works best about 20 years form now.  That is like looking at the Microbee and Commodore 64 in the 1980s and trying to work out who is going to produce the iPhone. 

 

[CussCuss]

[quote author=CussCuss link=topic=185709.msg302277#msg302277 date=1287002130]
Who says you have to pick 1 particular thing? You can subsidise green energy, wind, geo, solar PV, solar towers.

If you make a market for it, they will come

You need to make a market for alternative energy in general
[/quote]

Yeah im pretty sure thats what I said 🙂