Hang on a minute: what tax?

14 Dec

We all know Brer Abbott and The Undead are standing up for us against the dreaded


My problem is that I naively thought you could have a carbon tax, which the government has opted against, or an Emissions Trading Scheme (Cap and Trade), which the government has opted for.

Does it not follow then that while one is a tax the other is not? Sure, it may well be a cost, but a tax?

So shouldn’t that read:


Just asking on behalf of the English Language.

Quadrant (or rather David Flint) seems to have come up with the scary mantra in August. David Flint has become quite the sophist in his old age. Take his opening, for which he should feel nothing but shame:

Whenever I see the climate change minister on television, I feel like a kulak. To give her the benefit of the doubt, I assume she really believes that what she is proposing is in the public interest. I suppose that even the Bolsheviks believed they could actually run agriculture better than the kulaks, but their overriding interest was control, and neutralising, if necessary liquidating, their opponents, particularly their  class enemies. Then they could begin on one another.

Now I don’t think for a moment that Ms. Wong is into liquidations…

Oh ho ho ho, Dave, you are such a card!

His real concern is as you would expect:

If you belong to the West’s fastest growing religious denomination, the AGW’s – the Anthropogenic Global Warmers – the enactment of this legislation will produce some warm inner glow. But other religions don’t expect to lay waste to the economy, so why should the AGW’s?
But even if you are the most devout AGW and actually believe everything that St. Al Gore says, you know the ETS will not do anything at all to contain or reverse global warming…

Incidentally I refuse to fall for the AGW sleight of hand in renaming global warming as “climate change.” This was done because their premise that the planet was warming is now in some considerable doubt. That the media actually go along with this 1984 style change of name or its predecessor is similar to referring to the accused in a Soviet trial as “an enemy of the people.”  …

No, David, it was George Bush and his advisors that preferred “Climate Change” as a euphemism, not TEH LEFFT!  Nonetheless, I now prefer it myself simply because it is more accurate and more comprehensive than “Global Warming”, as the changes aren’t going to be uniform and will be various – but mostly variously disastrous if nothing is done. I can’t be bothered arguing that again in this post, but you all know how to follow a theme here, don’t you – not to mention the special items in the side bar.

Now there really is an argument about whether an ETS is better than a carbon tax, and whether either is necessary on top of other mitigation strategies. The consensus seems to be that one or the other IS necessary as part of a raft of measures. The argument from some economists is that the ETS may be the more cost-effective of the two.

And there is an irony in the Rudd government supporting it and BA and the UD opposing it: it is the most neocon one of the lot, your actual market approach! Back in August Michael Stutchbury of The Australian savoured the irony:

Then there’s the irony of Kevin Rudd’s diatribe against global financial capitalism and the frenzied trade in exotic financial instruments and derivatives that produced the global recession. An ETS does not trade in the physical commodity of carbon but in the "derivatives" of permit credits and debits. The Obama administration has forecast $650billion in revenue in 10 years from the sale of carbon permits. The global carbon trading market is forecast to grow to $3trillion by 2020. Yet the value of the underlying assets, the permits to emit carbon, will depend on government commitments to reduce emissions. Will these be more credible than the promises of sub-prime mortgages?

Later in that article Stutchbury quotes:

Former Treasury official and co-founder of Access Economics Geoff Carmody [who] describes Australia’s proposed ETS as "the GST from hell". That’s because it would hurt exports and help imports by targeting the production of carbon emissions (such as from coal-fired electricity generation) rather than the consumption of emissions (say from buying a car). This hurts economies such as Australia and China, which produce more emissions than they consume, and favours carbon importers and consumers in Europe.

There again we see the slide into calling it a tax, whatever else one may think of Carmody’s ideas.

And you’ll have noticed I am very much conflicted about the ETS myself, as has been reflected in some recent posts here. But I don’t believe it is a TAX as such.

Am I right or wrong?

See also:



8 responses to “Hang on a minute: what tax?

  1. Martin

    December 14, 2009 at 10:21 pm

    Well eventually it will be an free annualised (but time flexible) sale by auction of a limited amount of internationally transferable Co2 equivalent pollution permits by the government to others so in the sense that any transfer of money to the governmnet is a tax then yes it is a tax but it is of course voluntary in the sense that you can still choose to get out of any business that (officially) pollutes (i.e. which will produce an amount of pollution that will require a permit).

    But this fairly disingenous (IMO) scare campaign is where the Liberals are taking a leaf out of the ALP’s GST playbook (I hope with less success). In both cases (and in both cases mainly because the government was forced to negotiate with another party) the extra money the government got was in effect returned for the most part especially to the people most seriously affected and least able to afford the change uncompensated. So both opposition parties in effect appeal to fears that ignorant people have that they will bear the brunt of the extra costs. Some sections will bear more than others but as with the GST the government is saying the measure will be (broadly) revenue neutral so this isn’t more tax it’s actually just much better directed tax (on net Carbon Dioxide emissions and other net Kyoto ‘problem’ gas ‘Carbon Dioxide equivalent’ emissions). But as with the GST also with the ETS it seems to be relatively easy to scare people about if the opposition simply pretends that it is or will be extra tax rather than better tax. People just tend to feel threatened by any change if other people spend enough time and vested interest money trying to scare them about it for their own nefarious purposes.

    People forget in this that those who can’t really afford any higher costs will be well compensated and those who can’t be compensated as well (because the government has to compensate emissions-intensive trade-exposed industries as well as the poor and pay for mitigation and further research) would tend to be able to afford to share some of the cost (and would probably favour the liberals in many cases anyway). They also forget (incredibly) that the much greater cost will be the cost among other things of the virtually unimaginable economic devastation and the breakdown of civilisation that is more and more likely to come about sooner and sooner the longer those who really can afford to aren’t prepared to undergo this relatively painless change now.

    I hope that makes sense and isn’t too long-winded. If I am correct you would know all that so thanks for allowing me to have a frustrated rant about it.

  2. Neil

    December 14, 2009 at 10:41 pm

    Not a rant at all, Martin. Thanks for that.

  3. owner update

    December 20, 2009 at 9:11 am

    See Stephanie Peatling in today’s Sun-Herald:

    …Opposition leader Tony Abbott is busy reminding people of the cost of an emissions trading system and promising a yet-to-be seen policy that won’t cost anything.

    It has left the Government a bit flummoxed by the seemingly new concern about price. It thought it had this part nailed when it promised 100per cent compensation – and then some – for low- and middle-income households.

    The compensation will come in the form of rebates, so people still feel the impact of the rises (and supposedly change their behaviour) but don’t lose out overall.

    The Government never suggested the scheme would be cost-free…

    Selling action on climate change is not as hard as it seems.

    Remember when the ABC came up with the “eight cents a day” slogan? It seemed like a pretty good deal.

    Is reducing the risk of severe bushfires and limiting the damage to the Great Barrier Reef worth $1.30 a week? That’s what Treasury puts the average weekly rise in food prices under the scheme.

    That is about 19 cents a day andmost people won’t even haveto pay it thanks to the compensation scheme.

  4. Jim Belshaw

    December 20, 2009 at 4:37 pm

    Neil, the ETS is designed to raise money through sale of permits, money that can then be redistributed. Whether we call it a tax or not, it has the same effect as a tax. If you want to stay in business, you have to pay.

    TA’s use of the term “great big tax” is, of course, a great big stunt.

    I think that you have to be very careful with comments such as the $1.30 per week for food. Carbon reduction will cost, it has to if we are going to reduce carbon emissions. To pretend otherwise will create real problems a little later as the costs flow through.

    So far we have had one official pricing inquiry, that on electricity in NSW, and that points to significant cost increases. And that is what I would expect.

    If you look at the ETS, every dollar the government gathers from sale of permits has either to be absorbed by business or paid for by final consumers through price increases.

    Specifically on food, food prices have risen in recent times and will rise further as the ETS kicks in. Like the NSW electricity case, those rises will be due in part to the projected effects of the ETS, in part to other variables.

    I haven’t modelled the effects on food prices, but the $1.30 a week strikes me as astonishingly low given that farm input costs will rise, distribution costs will rise, as will final sale costs.

    None of this should be construed as opposition to action on climate change. I just think that we need to recognise, to be hard headed about, the fact that such a fundamental change in the way things are done will cost.

  5. Kevin

    February 17, 2010 at 11:55 am

    Heh. I come back to visit the crazy progressive from down under, and he doesn’t disappoint! So, one’s a tax, and the other is not, huh?

    Here’s a simple rule for determining if something is a tax or not.

    – Will the thing increase the income of the government?

    That’s it. Will cap and trade (aptly derided as ‘cap and tax’) fill the government coffers? Yes, it will. It’s a tax. I am stunned that you are trying to deny that, especially since the AGW myth is already 1 year into it’s 5 year death-cycle.

    I suspect that when all is said and done (~4 years from now), you will not feel the slightest need to apologize for the harm you’ve done by supporting the AGW scam. Not even a twinge of remorse. You’ll feel justified, because even though you didn’t understand the science enough to see through the scam… damnit, you cared.

    Of course, those evil heartless conservatives were the ones that were right… but you’re the one who cared for the imaginary problems of the Earth more. Kudos :).

    Side note: Once global warming is admitted to being the scam that it is by the left (4 years from now), what is the next ‘disaster’ awaiting us that can be blamed on mankind – the only type of disaster progressives are interested in? My guess is “we’re running out of soil, and it’s going to cause X billion deaths every week!” That one will take another decade to debunk. I know it’s a silly armageddon scenario, but do you have one that’s more likely to be embraced by the progressives?

  6. Neil

    February 17, 2010 at 11:58 am

    Hope all is well with you, Kevin. Note this blog is now mothballed. Go to for the latest.

  7. Neil

    February 17, 2010 at 11:59 am

    Nice avatar, Kevin!

  8. Neil

    February 21, 2010 at 10:11 pm

    Kevin (and any others who may drop by): look at my 2010 page on climate change.


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