Lines Drawn In Australian Carbon Tax Battle

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

18 July 2011

The Australian government has called on Opposition Members and Senators to declare if they will follow the Leader of the Opposition, Tony Abbott, and vote against the proposed carbon tax.

Abbott has been fiercely critical of the tax, saying this week: “The design of the tax is a quagmire of complexity and you cannot trust this government to get it right. It is a massive and permanent increase in the size of government, and includes a AUD10bn Gillard Bank to finance high risk, speculative projects.”

His alternative is a Direct Action plan which he says will be costed, capped and fully funded from savings to the budget. He says: “The Coalition’s Direct Action plan is a strong and effective policy that will reduce carbon emissions by 5% by 2020 without a new tax.”

Wayne Swan, Australian Treasurer, has been keen to stress that the government will be delivering cost of living help to households for the price impacts from the carbon price, by introducing separate legislation. The assistance will include:

• Delivering a pension increase on average AUD210 over and above the average price impact for a pensioner household, across 1.85m pensioner households (including full and part-rate pensioners).
• Increasing the tax-free threshold from AUD6,000 (USD6,248) to AUD18,200 in 2012 and to AUD19,400 in 2015, taking over one million Australians out of the tax system.
• Delivering a tax cut to everyone earning up to AUD80,000, with most getting a tax cut of at least AUD300.
• Providing a 20% buffer over and above the average expected price increase for over four million Australian households.
• Covering the full average expected price increase for almost six million Australian households.

“It's now time for the Opposition to clarify its position and for individual Members and Senators to declare whether they will oppose this cost of living relief for Australian families, pensioners and individuals,” said the Treasurer.

“And claims that Mr Abbott makes about alternative tax relief must be accompanied by details of the amount Australians can expect, as well as how this tax relief will be funded and its impact on the budget bottom line if the Coalition is to have any credibility.”

Assistant Treasurer Bill Shorten supported Swan’s views by saying: "The fact is, this package provides certainty for investment, it makes big polluters pay and it gives a fair deal to families and vulnerable Australians. This is a great outcome for Australia and it is a real pity Tony Abbott and the Coalition can't overcome their desire to say ‘no’ to everything and give Australia's future bipartisan support."

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