Power to the people on an ETS - without a new tax
Tony Abbott has rejected the dominant ETS paradigm. He says he wants, though, to re-balance business and household behaviour and incentives to move the economy to new, cleaner, climate adjustment technologies, but not cripple employment in key industries in the process.
Here’s one suggestion – turn payroll taxes into ‘climate adjustment’ levies, at neutral total cost to business. Then expand business and household rebates on all expenditure on green technology – tax avoidance based on positive, environmental citizenship.
Instead of taxing jobs – always a stupid tax arrangement – treat carbon emissions as an externality and turn the tax into a levy, but allow people to neutralise this levy only through investment in emission reduction technology.
The Government would need to make the rebate coverage very generous and broad – include solar panels, insulation, lighting and LPG vehicle conversions for the average citizen, investment in energy reduction technologies for businesses, and alternative or cleaner energy investment for energy producers.
The proposal has a number of advantages. It does not increase tax overall – in fact it could lower overall tax and operating costs for many businesses. It puts a price signal and disincentive on carbon emission, even if smaller than some climate activists demand.
It gives citizens a role in climate strategy. By taking a decision to make a climate adjustment investment for your business or home, you help the community adapt to and lower climate change, and you are more simply and directly involved than in the complicated ETS. It also means citizens –corporate and individual – only gain a benefit when they actually invest in clean technology: they can’t get a benefit from polluting and simply buying an ETS credit.
The Commonwealth would need to do a GST-type deal with State and Territory Governments to provide stable future revenues, and would have to accept the burden of the rebates. But funding investment in clean technologies has been and continues to be a funding commitment by both Government and Opposition, with significant rebates already in place and ripe for rationalisation. And Abbott was part of a politically capable Government that delivered sound GST reform with the States.
Mr Abbott says he doesn’t want a new tax. He does not want the irreversible, neo-liberal market-based solutions of the Government. He does, however, want investment in clean technology. He also favours prudent adjustment to climate change, rather than quixotic campaigns aimed at deindustrialisation. So why not outflank the PM and introduce green tax reform that has the double benefit of taking away the current tax on employing people?
I think payroll tax conversion to a green, climate adjustment levy, with generous ‘environmental citizenship rebates’, would be the positive and easily communicated alternative to the ETS he is looking for over the next two months.
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