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Green fiscal reform.

Taxing good stuff, funding bad stuff

What we do now ...


A tax on activities like:

* Income tax & Medicare levy

* Company tax * Payroll tax

When we tax personal and company income, it reduces incentives to be productive

* disempowers you can't reduce your tax bill except by reducing income or engaging in tax avoidance

* The wealthy are meant to pay a higher proportion

* But tax breaks and loopholes can reduce the fairness of the system

* discourages productive work and job creation

* encourages creative accounting (like reducing reportable income and profits and tax avoidance)

* encourages companies to use capital to replace workers wherever possible, because capital is taxed at a lower rate


% of total tax revenue derived from productivity taxes: 58%

% from environmental taxes: 7.3%


Accelerated depreciation is a tax break for companies that invest in certain assets. Oil and gas drilling and refining equipment, heavy vehicles, and aircraft benefit

2001-2011 government revenue from environmental taxes fell from 7.9% to just 7.3%

Why? 1. The decision to stop indexation of fuel excise in 2001. 2. Escalating cost of other tax breaks on fossil fuel use

The official company tax rate in Australia is 30%

BUT due to tax breaks and loopholes mining companies in Australia have paid effective tax rates as low as 8.7%

Australia's effective tax rate on mining companies is lower than in many other countries with significant mining activity

SPENDING that rewards pollution and resource use in 2013-14:

* Reduced fuel excise for aviation: $960 million

* Accelerated depreciation for oil it gas assets, heavy vehicles and aircraft: $1,140 million

* Free carbon tax permits: $1,007 million

* Ending indexation on petrol excise in 2001: around $5,000 million

* Exemptions from the Minerals Resource Rent Tax and Petroleum Resources Rent Tax: up to $700 million

Australia's total environment protection expenditure = 1.3% of annual CDP

Our target level of spending for national defense is 2% of annual CDP

According to the government's 2011 energy white paper keeping up with electricity demand with our current polluting energy system will require $200240 billion

The fuel tax credits scheme Is the 14th largest government expenditure program. The government spends more on subsidising fossil fuel use than helping families with childcare fees
Fuel tax credits scheme: 5,871 million

Mining                   42.5%
Transport                17%
Agriculture             10.6%
all other industries    30%

Note: Table made from pie chart.

Taxing stuff, funding good stuff

What we could do instead ...


A tax on ecologically damaging activities, like:

* Pollution

* Use of water, fossil fuels, minerals, and other resources

* Waste

* Traffic congestion

When we tax pollution and resource use, it creates an incentive to pollute less and be more efficient

* encourages companies to create jobs and reduce material inputs and L pollution

*empowers you can reduce your tax bill by reducing pollution and resource use

* encourages genuine innovation

* scientists and engineers help reduce pollution and resource levels

* marketplace shifts consumption to lower-impact goods and services

* encourages efficiency

* discourages pollution and resource use



UK firms that were subject to a climate change levy filed more patent applications than those that paid a reduced levy


Sweden's tax on nitrogen oxide pollution led to an increased use of abatement technology from 7% to 62% of affected firms in a single year


Other industrialised nations like Denmark, the Netherlands, and Turkey collect up to 12% or more of government revenue from environmental taxes

We could increase the % from environmental taxes to 12% - and reduce the 70 from productivity taxes to 53%, (a $20 billion shift)


Renewable energy and recycling facilities and building efficiency upgrades don't receive the accelerated depreciation tax break!

The Commonwealth dropped plans to offer accelerated depreciation for green buildings in 2011

SPENDING that rewards efficiency and job creation:

* Fuel tax credits could be replaced with tax rebates = invest in efficient equipment ft farms rewarded for sustainable land management practices

* Accelerated depreciation should be for green assets, not polluting assets

* $9 billion extra could fund major investments in public transport, clean energy, green buildings, recycling infrastructure, sustainable farming practices, and better funding for national parks and biodiversity protection

The average level of environmental protection expenditure across the European Union nations is 2.25%

If Australia spent 2% of CDP on environmental protection we'd have $9 billion extra annually to invest

For $219-252 billion we could have a 100% renewable electricity

* In 2013-14, the carbon tax will raise $6.3 billion, and the minerals and petroleum resource taxes $3.1 billion

* The entire budget for the Commonwealth sustainability department for 2013-14 is $2 billion

1 AEMO, (2013) "100 Per Cent Renewables Study--Draft Modelling Outcomes", Draft for Stakeholder Briefing, Canberra, Australian Energy Market Operator, 24 April, 111 pp.
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Title Annotation:fiscal policy in Australia
Publication:Habitat Australia
Geographic Code:8AUST
Date:Jul 1, 2013
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