by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Rather than look to Europe for great public policy ideas, perhaps the movers and shakers in Washington, D.C., should turn their attention to Australia. They could start by considering this “Drum TV” article from Sinclair Davidson.
The carbon tax has been repealed. While there has been a bit of kerfuffle and excitement around the repeal that will keep political junkies talking for some time, the voters will recall a promise made and a promise kept. …
… Ironically, a tax is the theoretically correct market-based economic solution to a long-lived stock pollutant such as carbon dioxide. An emission trading scheme (ETS) – what the carbon tax was due to evolve into – is not. Politicians, however, have been loath to be seen to be introducing new taxes, and so had chosen an ETS mechanism over a tax. That is the first major defect of Australia’s carbon tax (and indeed of every other such mechanism).
The second major defect – arguably the most important – is that our carbon tax was a local tax. If global warming is a problem, then it requires a global solution. A local tax will do nothing to address global warming, apart from imposing high costs on the local economy.
Let’s not kid ourselves; the costs associated with the carbon tax are high. They are meant to be high. After all, avoiding the costs associated with the carbon tax was meant to drive our economy away from its reliance on fossil fuels, drive innovation in alternate energy, and avoid the apparently even higher mitigation costs of global warming.
That is why the tax needed to be repealed and not just kept as a revenue raiser – ideally taxation should have lower rather than higher deadweight losses. The carbon tax – by design – was meant to have a high deadweight loss. Those deadweight losses are the drivers of the expected changes.
Meanwhile, at least one contributor to this forum would like to see more of the Australian prime minister … perhaps in 2016.