Climate Change Alert: There's no car in carbon tax - 7 July 2011

The Multi-Party Climate Change Committee (MPCCC) has been locked in negotiations for the past few weeks, attempting to sort out the final details of the proposed carbon tax.

Those details are set to be released this Sunday and will include the all important price of the carbon tax and details of who, and which industries, will receive assistance and/or exclusions from the carbon tax.

Here, Partner Michele Muscillo and Solicitor Ben Ricketts look at what has already been announced by the Federal Government and what we can expect from Sunday's announcement.

Already, Prime Minister Gillard has announced that "petrol you get at the petrol pump" will be unaffected by the carbon tax. However, the details of other assistance to segments of the economy and industry remain unclear.

The MPCCC has had differing views on how petrol should be treated by the carbon tax. This difference in opinion was driven by the competing interests of stakeholders and the tension between lowering overall emissions and seeking to ensure the carbon tax did not place an intolerable burden on those who can afford it least.

There is the possibility, of course, that eventually fuel will be included in carbon pricing either in the future make up of the tax, or when the tax evolves to an emissions trading scheme from 2015.

Businesses to receive reduced fuel concessions

News that petrol at the pump will be exempt from the carbon tax would seem to be a win for both individuals and businesses, however it has been reported that this exemption will be offset by cuts in the fuel tax concessions available to businesses.

Currently on-road vehicles greater than 4.5 tonnes are entitled to a fuel tax credit of 15 cents per litre. The detail has not been released, but it is has been reported that this fuel tax concession will be reduced, meaning that businesses (including those that use vehicles greater than 4.5 tonnes) may ultimately pay more for their fuel.

Eventually, the proposal is that different fuels will be taxed according to the emissions intensity of each fuel - for example LPG has less carbon emissions than diesel (and petrol) per litre, so it will be taxed differently - thus encouraging the use of alternative fuels (such as ethanol blend).

More power given to ACCC

The government has also announced that extra powers will be given to the Australian Competition and Consumer Commission (ACCC) to investigate price gouging and prosecute those companies that increase prices at a greater rate than the change in price due to the carbon tax.

The extra powers are to be given to ensure that prices rise by the same amount as the carbon tax and no further. This is designed to prevent a repeat of price exploitation that occurred following the introduction of the GST when thousands of companies were investigated for price gouging.

Following the GST, the ACCC undertook a process of naming and shaming companies that had overcharged customers and investigated 120,000 cases of potential non-compliance with GST pricing guidelines in the first two years of the introduction of the GST.

The details of the Government's carbon tax will be released on Sunday and an update will be provided by HopgoodGanim to our clients shortly thereafter.

For any enquiries in relation to the government's proposed carbon tax please do not hesitate to contact HopgoodGanim's Climate Change team.