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I love the irony of this. Amongst his other mad mutterings, Abbott declared that an Emissions Trading System is a hidden tax on carbon. (I have previously rebutted this assertion here). Today, he announced an even better hidden carbon tax as his alternative strategy.

Abbott wants to use a plethora of methods like (paying farmers to use) soil sequestration. All fine and dandy until we come to the question of who is going to pay for it. If the answer is the government, then the only way to pay for such huge spending so soon after the stimulus package is to raise taxes!

As I earlier explained, an ets has 2 functions. Firstly, it provides a mechanism for funding those very soil sequestration projects that Abbott wants to promote. Secondly, it shifts the onus for spending from government onto those private sector companies which emit the carbon in the first place. (Again, this is the reason why an ETS is not a tax… the money never goes to the government).

In other words, the ETS does exactly what Abbott wants to do, except better in every way. It pays for those projects he wants to eliminate in the most efficient way possible. Rather than laying costs onto every taxpayer, it lays the costs onto companies (who may pass these costs onto some taxpayers, but the burden will fall most heavily on those taxpayers who have the largest carbon footprints). Because it is targetted, it creates incentives to lower carbon emissions (unlike Abbott’s scheme) so that means overall the scheme will cost less.

The basic difference between Abbott’s scheme is that the programs will be wholly run by the government, not the private sector. It will be funded by the government taxes, not the private sector. The projects will be chosen by the government whereas the ETS relies on the market to find the most efficient and cheapest ways to lower carbon. Of all the arguments the Liberals love most, it is that the market is better than the government at allocating resources. Apparently all resources except carbon.

So in summary, Abbott’s scheme is a tax (or at least, it will raise taxes) and is indeed a very well hidden tax, for his tax will be hidden amongst all the other taxes rather than having the word Carbon imprinted on it, like the ETS. And in fact, its a pretty inefficient tax which assumes that capitalism doesn’t work. Poor effort, Tony.


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