Wednesday 6 April 2011

Carbon tax

Lots of talk today about the proposed new carbon tax that looks to be introduced in the next few weeks. We we speculating about the price per tonne of carbon perhaps being between $10 - $40 AUD. My guess is about $27 per tonne. This could mean that Aussie household will have up to $800 more in energy costs per year. However, the government is planning to compensate low and middle income earners with tax rebates or cash payments. This seems counter productive. However, if the "substitution effect" occurs then consumers will reduce they consumption of energy (from coal) and switch to more sustainable goods such as electric cars. Do electric cars sell well in the states?

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