The Western Australian Treasury has conducted a preliminary assessment of the impact of the Commonwealth Government's proposed carbon tax package (announced on 10 July 2011) on the Western Australian economy, budget, and households.
The paper highlights the key assumption used in the Commonwealth's modelling of unlimited international emissions permits from 2015-16, which is very optimistic given that no global market for such permits currently exists.
If this key assumption does not hold, the domestic cost of emissions abatement could be much higher than the Commonwealth estimates. The paper also shows that: the State Government-owned electricity utilities are estimated to have a direct carbon tax liability of up to $280 million per year; the 'representative' Western Australian household is estimated to face an increase in State Government tariffs, fees and charges of $144.11 (or 3.7%) in 2012-13 due to the impact of the carbon tax; and an estimated 419,000 (or 52% of all) Western Australian households will be insufficiently compensated by the Commonwealth (through income tax cuts and/or benefit payments) for the impact of the carbon tax on the cost of living.
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