Australian Government Postpones Carbon Tax

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

28 April 2010

Australia’s Prime Minister, Kevin Rudd, has disclosed that the government has postponed its proposed emissions trading scheme (ETS) until no earlier than 2013, after the Kyoto Protocol is due to expire late in 2012.

Australia is attempting to reduce its carbon emissions by at least 5% by 2020. However, there is complete disagreement between the government and the opposition on the means by which this should be achieved.

Under the proposed ETS, the government would have introduced an Australian emissions unit auction charge, the cost of which would have been established through an auction mechanism. Businesses emitting greenhouse gases would have needed to purchase a permit based on that charge for the volume of gases each produced. The scheme was scheduled to start in July next year.

However, the ETS was rejected again by the Senate at the beginning of December last year, and then it was delayed further in February this year when the Senate decided to postpone any debate on it. It was extremely unlikely that the government would have been able to move the ETS forward before elections this year, while the opposition was describing it as a “great big tax”.

The Prime Minister has explained that the ETS’s postponement is the result of opposition in parliament and delays in introducing action against climate change in other countries. A deferring of Australia’s ETS will, he said, enable the government to look at how far similar measures have been taken forward globally, before making its own final decision.

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