Our government is currently using an approach of regulation and
subsidy while considering the possibility of implementing a carbon
trading scheme. We would be better served if the government replaced
all of these options with a revenue-neutral carbon tax. A carbon tax
is preferable to a carbon trading system because it is more efficient,
effective, simple, flexible, and transparent. More importantly, a
carbon tax has the added benefit of providing revenue which can be
used to cut other taxes. Indeed, a revenue-neutral carbon tax may have
little or no economic cost.
Compare this with Humphreys’ rhetoric on his web site opposing the tax:
In a deal with the Australian Greens, Prime Minister Gillard announced a multi-million dollar tax on carbon, with no offset in other taxes.
That’s rather deceitful. They haven’t announced what other taxes will be cut, but they did say that it would be budget neutral.
This is a tax that will hurt every single Australian: electricity bills alone for the average family will go up by over $300 a year.
They haven’t even decided how much the tax will be, so how can Humphreys claim this? In any case, it’s the net cost that matters to Australian families — since the tax is budget neutral, that’s going to be zero on average.
This is simply another grab for cash by a wasteful government that will do nothing to address climate change.
“Budget neutral” does not mean the same thing as “grab for cash”
This proposal makes no economic sense, and will do nothing to address climate change. All it will do is make every Australian family suffer and cripple our economy.
Or it might have “little or no economic cost” according to Humphreys in 2007.
Humphreys tries to justify his backflip with this.
“A moderate carbon tax, with offsetting tax cuts, would be the least harmful policy for combating climate change” said Mr. Humphreys. “However, the current policy fails because it does not provide the offsetting tax cuts, and so it will increase the size of government and hurt the economy. It is also worrying that the government seems intent on switching to an emissions trading system, which is an unnecessarily complicated and inefficient response to climate change.”
The difference between revenue neutral and budget neutral doesn’t seem to be that large and insisting on revenue neutral seems to be a less flexible approach when you want to compensate low income folks for the cost of the tax. As for the switch to the ETS, surely Humphreys should oppose that, rather than the carbon tax itself.