July 12, 2011

Is the carbon tax inflationary?

One of the major criticisms levelled at the government’s plans to put a price on carbon is that it is inflationary – that it will raise prices by a large amount. Treasury modelling shows that the cost to an average household will be approximately $9.90 per week.

According to their calculations, the consumer price index (CPI) will increase by 0.7% in 2012-2013 due to the plans. To put that into perspective, the GST and related changes caused an increase to the CPI of almost 2.5%! Take a look at the chart below to get an idea of how minimal the impact will be on overall prices, and remember you are likely compensated for these price impacts and you stand to gain if you can cut your consumption of carbon-intensive products.

Treasury modelling on the impact of a carbon price on inflation

Treasury modelling on the impact of a carbon price on inflation

  • Ludvikkucera

    well we know were the pay rise is comming from

  • Concerned citizen

    I don’t call a 52% (in Qld) hike in electricity small, which is equivalent to a $10/week rise for an average consumption of 5000 kwH as outline above.  It is hard to imagine that there will only be a 0.7% rise in inflation as a result. 

  • MartiB

    Just worked out the costs to my business for this Tax. Close to $100,000 pa. That means 2 jobs will go

  • Andris

    What’s the point of the tax if it doesn’t have an impact on prices which in turn changes consumer behavior?
    Labour are trying to convince the public that it will not have an impact to the cost of living and at the same time arguing that it will drive down greenhouse gas emissions!

  • Dennis Furey

    If the impact is supposedly small on inflation and households why is compensation needed. It tells me the opposite.

  • May

    YES. It IS an inflationary. No fool will forget that our surplus is GONE!

  • Sunrealtynatalie

    My grand daughter will indoctrinated (entering 1st grade here in the USA) this fall. I warned her she will be hearing lots of propaganda on man made global warming and “fair share” nonsense. I told her she must raise her hand, and yell “BALONEY!”

  • Sam Gray

    You don’t believe in man made global warming…?

  • Anonymous

    There is amble evidence that the Carbon Tax is causing substantial price increases. If the result was the government having additional funding to apply technology in a way that created jobs then the additional price may be justifiable.

    The problem is that it is not the government that is getting the additional funds.The Electricity Retailers are charging for the Carbon Tax from users of Solar Panels which the residents have paid significant money to buy, in part, to reduce the Carbon in the atmosphere. A bit ultraistic I know but the ER’s have no cost and rip the carbon tax from every householder that has Solar Panels. Since there doesn’t seem to be a way for the money to be passed back to the government in these circumstances, the ER’s are simply taking the estimated $10-00 per week from 800,000 households with Solar Panels (that’s $400 million per annum with no cost whatsoever if the ER’s haven’t added a margin to the cost (no one would believe they haven’t) as cost free profit.

    The government was so keen to get the Greens on board so they could form government that they appear to have conned them into believing they would help their cause with a Carbon Tax. In truth, they put in an electricity usage tax and gave it a name to appease the Greens. The Independants have no way to ever be any kind of safeguard to a government that will do anything legal or otherwise to stay in power.

    The so-called Carbon Tax whether it is a carbon tax or an electricity usage tax may well be an illegal tax as it charges New South Wales residents about 25% more than it does other State residents in certain conditions. I think the Australian Constitution forbids that and so the whole legislation must be repealed and can not be re-introduced because of the difference in legislation on the Solar Generated Electricity Bonus Scheme. They are stuck with governments having different contracts for fifteen years from the last one accepted – presumably as late as today.

  • Anonymous

    The main objective of he Carbon Taxis to transfer your hard earned money and you investment in a greener world into a cost free profit for the Electricity Retailers. Did you know that they are charging households that have Solar Panels to make the world greener with the Carbon Tax the same as if you had not been that little bit green. The ER’s have made false and misleading statements in order to get government to allow them to increase prices on the pretext that Solar Panels mean they have to increase their investment. That is simply not true. Solar panels reduce the flow of electrical current in all but the minor area around the Solar Panel installation and then the current flowing in that area is still less than one eighth of the current flowing in the same area from the power stations during peak hours.

  • lol

    no offence Gran, but I think I will trust the plethora of science based, peer reviewed opinion over your baloney