We have a tax reform coming up. This is a significant opportunity for us to deal with greenhouse emissions, water usage etc. Please read this letter I just submitted, and submit one of your own:

http://www.treasury.gov.au/ministerial.asp

Dr Mr Costello

re: Tax reform

I support moves to reduce the total tax burden on Australia. I would like you to introduce a Green Tax Shift (GT with the upcoming tax reform and also take the opportunity to remove damaging subsidies.

As per the philosophy behind a GTS, the income from these taxes should be offset by reduction in income and other taxes. Failing to tax a negative externality such as CO2 emissions is an effective subsidy as society must bear the costs associated with the emissions. Thus green taxes represent no net burden to the economy as they are removing an effective subsidy. The opportunity they present for reducing taxes on environmentally and socially benign activities – such as employment – represent a huge and underappreciated lost potential. A GTS can be implemented alongside whatever reform option you choose.

A GTS is preferable to a carbon trading scheme in which emissions rights are given away for free. This implies that industry has the right to pollute and we do not have the right to clean air. Giving away these rights for free would be a huge subsidy and a huge loss to society. Furthermore, they should be rented in the form of a tax instead of sold. This is the only way to keep a mechanism for changing emissions levels as we get a better understanding of the greenhouse effect. State governments made a mistake when they gave away commercial fishing rights last century and society is now having to pay to buy them back.

Most Australians support efforts to reduce greenhouse emissions. However, far fewer are prepared to do so on their own accord at significant personal expense while still putting up with emissions from other people. We are all in this together and a GTS allows everyone to adjust their lifestyle as is necessary. Furthermore a GTS is the only way of enabling consumers to find out the true cost of all products they purchase and is the most economically efficient way to reduce emissions.

Damaging subsidies, such as all subsidies to fossil fuel industries and farming should be abolished – including drought relief. No established industries or technologies should receive subsidies.

Petrol and diesel taxes should cover the full cost of road construction and maintenance. Petrol consumption is the best indicator of wear and damage to roads. Petrol taxes should replace ‘fixed charges’ such as vehicle registration and licence fees.

In addition, petrol should be taxed at a rate high enough to get consumers to consider the negative impact of CO2 emissions to society. This will not only affect consumers at the bowser, but will also make the price of all goods reflect the true cost to society of emissions. CO2 emissions at power plants and factories should be charged at an equivalent rate. Beef production should also be taxed according to the emissions produced by cattle. This can be refunded for exported beef until our competitors do the same.

Water should be charged for at the same rate across whole catchment areas. Farmers, householders and industry should be charged the same amount. The price should be increased enough to restore significant natural flows to our waterways. The recreational and environmental value, and the value to our fisheries of healthy flows should be taken into account.

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The tax on tobacco should be doubled. The tax on alcohol should be increased if consumption is still relatively inelastic to price. Marijuana should be legalised and regulated like tobacco, and taxed to buggery.

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My group on green taxes:

Green Tax Shift

I had to submit that letter in two parts at the site I linked to because it limited me to 2500 words.

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Good on you, Freediver

I support most of what you have written above

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I got a response. Most of it looked like 'click here to insert the standard paragraph on ....'

So I sent this back:

Dr Mr Epstein

Thank you for your response dated 20/4/06.

My original enquiry was on the topic of a green tax shift, which you did not mention at all in your response, except for acknowledging the possibility of a reduction in alcohol and tobacco consumption in response to high taxes. My main concern is with greenhouse emissions (a carbon tax) and also a tax on petrol to cover road maintenance. You appear to think that I wanted fuel excise income specifically earmarked for road construction ("hypothecate or earmark revenues...to particular purpose"). That is not what I was getting at. What I want is for the price of petrol to reflect the real cost to society - the cost of obtaining the petrol plus the cost of the emissions and the cost of maintaining the roads that the petrol will be used on. This is not for any accounting purposes, but rather so that the use of the roads and emissions was limited to a rational level at which the dollar cost reflects the real cost to society. If this is not done we are effectively subsidising transport.

Do the various taxes on petrol cover the cost of road construction and maintenance?

Are the taxes distributed rationally between private and business users (eg trucks)?

I also indicated that I think these changes should be 'revenue neutral' - that is they should be offset by a reduction in other taxes. I also indicated my preference for a net reduction in the total tax burden. However, these points less important to me than shifting the tax base.

I believe that proper economic incentives will be far more effective than any government funded efforts to reduce emissions. Your policies do nothing to take advantage of the easiest mechanism to reduce emissions - a reduction in consumption.

I do not believe that the government has a 'comprehensive strategy' as you claimed. Rather they have a piecemeal approach that targets the easiest political paths rather than the most effective route for society as a whole. I believe that the government has deliberately avoided good options because they would impact the profits of fossil fuel companies.

I support research into technological solutions that are still a long way off, but these should only form a minor part of the greenhouse strategy. The main focus should be immediate reductions. Such an approach would not harm our competitiveness if implemented as a green tax shift.

I acknowledge the complexities involved in water pricing. However, whatever it is the various bodies are doing to restrict water consumption is not effective enough and is not returning sufficient natural flow to our waterways. Rather than subsidising residential rainwater tanks we should be charging people more for their water and letting them decide whether a tank makes economic sense.

Sincerely,

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Note that the treasurers longwinded response to me about all the wonderful things they are doing failed to mention the fact that his government has a policy against carbon taxes. Talk about trying to bluff your way out!

http://www.theaustralian.news.com.au/story/0,20867,19390797-601,00.html

Nuclear power needs a coal tax

Steve Lewis and Joseph Kerr

Setting up an explosive pre-election battle with Labor, the Prime Minister yesterday announced former Telstra boss Ziggy Switkowski would head a taskforce to consider ways to "add value" to Australia's significant uranium reserves.

Taskforce member George Dracoulis, the head of the Department of Nuclear Physics at the Australian National University, said comparisons between nuclear, renewable and fossil fuel power generation needed to take into account all costs.

"It's hard to beat (coal) in Australia if you don't charge some premium for emissions because it's a very cheap resource in Australia," he said.

Any economic analysis of nuclear power would also have to consider putting a tax on carbon pumped into the atmosphere by other energy sources, particularly coal, key members of the taskforce believe.

While the federal Government is currently opposed to a tax on carbon, two members of the taskforce are pushing for a full reckoning of all the costs of energy production and are open to carbon taxes.

"Whatever decisions are made should be based on a full comparison of all the costs and benefits, including whether there's a tax on carbon or not because that makes a big difference in any of these decisions," Professor McKibbin said.

The potential for the introduction of carbon taxes has been one of the drivers behind extensive research into clean coal technologies. Four proposed plants utilising the technology are at various stages of development in Queensland.

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