At this time last year, the Australian government began collecting the world’s most expensive carbon tax. A year later, it seems unanimous among Australia’s two biggest parties that the tax has got to go.
Prime Minister Kevin Rudd yesterday recommended replacing the tax with cap and trade. The change would potentially cut carbon emissions prices from $24 to $6 (in Australian dollars). Challenger Tony Abbott is advocating to eliminate the tax altogether.
But a cap-and-trade program wouldn’t do much to help out businesses and individuals on their energy bills. The Heritage Foundation calculated the effects of a cap-and-trade program considered by the U.S. Congress in 2009. The results showed that by 2035:
- Gasoline prices would rise 58 percent (or $1.38);
- Natural gas prices would rise 55 percent;
- Heating oil prices would rise 56 percent;
- Electricity prices would rise 90 percent;
- Including taxes, a family of four would pay an additional $4,609 per year;
- Aggregate gross domestic product losses would be $9.4 trillion;
- Job losses would be nearly 2.5 million; and
- The national debt would rise an additional $12,803 per person ($51,212 per family of four).
Aside from burdening businesses and families, cap and trade isn’t a serious environmental policy either. In 2009, Lisa Jackson, then-Administrator of the Environmental Protection Agency, recognized that cap and trade would do next to nothing to reduce global temperatures.
Regardless of what happens in Australia’s elections this fall, Americans should steer clear of a carbon tax or cap and trade.