Australian Airlines Seek Carbon Tax Clarification

by Mary Swire, Tax-News.com, Hong Kong

18 March 2011

The chief executives of both Qantas and Virgin Blue airlines are keen to learn the finer details of Australia’s proposed carbon tax and have asked the government for answers to some of their questions, including whether the tax will apply to both domestic and international flights.

Qantas boss Alan Joyce has said that while there was no question that a AUSD20 to AUSD30 per tonne cost on carbon emissions would be passed onto customers, the amount would be less than the increases caused by rising oil prices. He suggested that the increase in terms of airfares would be in the single digits in dollar terms.

Joyce has said that while he needs to know more detail, he was generally in favour of the new policy announced last month by Prime Minister Julia Gillard.

The two-stage plan for a carbon price mechanism will start with a fixed price period for three to five years before transitioning to an emissions trading scheme. The government proposes that the carbon price commences on July 1, 2012, subject to the ability to negotiate agreement with a majority in both houses of Parliament and pass legislation this year.

When the new tax proposal was announced the Prime Minister had said: “A carbon price is a price on pollution. It is the cheapest and fairest way to cut pollution and build a clean energy economy. The best way to stop businesses polluting and get them to invest in clean energy is to charge them when they pollute. The businesses with the highest levels of pollution will have a very strong incentive to reduce their pollution."

Joyce believes that it is an important step towards transitioning Australia away from coal-fired energy and non-sustainable fuels, but he also says that there should be a sectoral approach, stressing in an interview with The Australian: "We are happy to have carbon pricing, having the certainty around it, but it should have been a uniform system around the world that applies to every airline equally and doesn't cause distortions in the marketplace."

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