Australian climate adviser recommends starting price for carbon tax

09:38, June 01, 2011      

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Australian federal government's key climate change adviser on Tuesday recommended polluters pay a carbon price starting from 27 U.S. dollars a tonne, raising 12 billion U.S. dollars in the first year of levying carbon tax.

Earlier, the government announced its plan to introduce a fixed tax on carbon emission from July 2012. The carbon tax will then turn into an emissions trading scheme (ETS) in three or five years time.

Professor Ross Garnaut released the final update to his landmark 2008 climate change review on Tuesday at the National Press Club in Canberra.

Garnaut suggested the carbon price should start at around 27 U.S. dollars a tonne and rise four percent each year in real terms until the ETS begins.

He said a carbon price of 27 U.S. dollars a tonne would raise about 12 billion U.S. dollars in 2012/13.

The tax could raise 16.9 billion U.S. dollars by 2022/23 before revenue declines as emissions fall.

Garnaut hit back at critics of the carbon tax, who argued Australia is getting ahead of the world.

He said Australia's decision on climate change will influence other countries.

"I don't accept that my country is an unimportant country. All the evidence is against it," he told reporters.

"We matter even on climate change, even though our emissions are only 1.5 percent of the world's, just like the United Kingdom matters with its 1.7 percent."

He recommended that for three years after the carbon tax is introduced in mid-2012 some 55 percent of the revenue should go to low and middle-income households to assist with price increases, and 35 percent should go to the polluting businesses as compensation.

But once an emissions trading scheme (ETS) is introduced in 2015, Garnaut argued 60 percent of the revenue should go to the low and middle-income family. That could then rise to 65 percent by 2021/22.

"Over time, as the transitional assistance to business declines, there will be a further opportunity to provide more assistance to households through a second round of tax cuts," Garnaut stated in his report.

Most of the assistance would be in the form of tax cuts with the tax free threshold raised to 26,354 U.S. dollars.

That would result in 1.2 million Australians paying no tax.

Garnaut said because a carbon price will not be enough to drive innovation on its own, revenue should also be used to boost existing funding for low-emissions technology to 2.6 billion U.S. dollars a year.

The federal government hopes to introduce carbon pricing legislation to parliament by September, pass it by year's end and introduce a fixed price by July next year.

Source: Xinhua
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