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Carbon tax price lift 'not on GST scale', economist says
22/10/2012 - The carbon tax is expected to have lifted consumer prices by around half a per cent during its first three months of operation. Evan Schwarten
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Economists say the greatest impact has been on electricity prices, though the tax is also believed to have lifted gas prices, council rates and fruit and vegetables.
Still, the carbon tax's effect is expected to be less than a quarter of the spike in prices after the introduction of the GST in 2000.
The Australian Bureau of Statistics will release the Consumer Price Index (CPI) measure of inflation for the three months to September, on October 24.
A survey of 15 economists on Friday revealed a median forecast for the CPI to have risen by 1.1 per cent during the September quarter.
Bank of America Merrill Lynch Australia chief economist Saul Eslake said the carbon tax was expected to have lifted the inflation rate 0.7 per cent during the 2012/13 financial year, with about 0.5 or 0.6 per cent of that believed to have occurred in the September quarter.
He said that by comparison the introduction of the GST lifted prices by about 2.9 per cent (contributing to a 3.7 per cent rise in CPI) during the three months to September 2000.
"Compared to the impact of the GST 12 years ago, it (the impact of the carbon tax) is quite small," he said.
"So to describe it as (in the words of federal Opposition Leader Tony Abbott) 'a great big wrecking ball to the economy' is just hyperbole," he said.
The GST was introduced by the Howard government on July 1 2000 and brought in more than $26 billion (in 2000 dollars) in its first year of operations, or about 3.4 per cent of the value of the national economy at the time.
By contrast, Treasury expects the carbon tax, introduced at the start of this financial year, to bring in $7.69 billion in its first 12 months, or about 0.5 per cent of the current value of the economy.
AMP chief economist Dr Shane Oliver said that while the GST covered most consumer goods, the carbon tax affected relatively few items.
He said the GST had been introduced at a time of strong consumer confidence and high inflation, a sharp contrast to the present environment.
"The key is, I think, the carbon tax was introduced at a time of consumer price resistance in Australia, where retailers were having discounts," he said.
"So it is of no surprise that the impact of the carbon tax is certainly a lot less than might have been expected."
Westpac economist Justin Smirk said he expected the carbon tax to have lifted the CPI by 0.4 per cent during the September quarter, with half of that impact coming from higher electricity prices.
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Colin Spencer | 22/10/2012 09:20 1
It is odd to claim that GST increased prices. All of the products I sold at the time were subject to sales tax at 27%. The selling price dropped considerably on all products after sales tax was replaced by GST. I guess it must have been the effect of GST on services rather than on products.
alan | 22/10/2012 10:01 2
What a stupid thing to say, the GST replaced taxes like sales tax and was designed to broaden the tax base so every busines paid their fair share. The Carbon Dioxide Tax is just another socialist tax using the evironment as the excuse and will make no difference except make Australian businesses uncompetative. Thanks Labor for the lie
Derek Wilson | 22/10/2012 11:15 3
I notice thgat you welcome thoughtful comment. That from Alan certainly is not. Rather is is just a stupid, politically motivated rant. The Carbon Price is already making a difference to Australia's CO2 emmissions and spurring on the creation of the next generation of clean jobs. People like Alan should get out of the way of this real progress.
dave d | 22/10/2012 11:23 4
Derek, I notice from your choice of words like stupid, rant etc. and the claim without any foundation or proof re. "already making a difference" in your response to Alan show what a really intelligent informed and learned person you must be - NOT !!
Alf | 22/10/2012 11:57 5
Gentlemen stop your fighting, you are turning a stupid unnecessary tax into something serious and important. This tax is a weapon designed to destroy further our economy, our companies, our jobs and our incomes,and our will to live in a decent society run by Labor for all peoples, but only if you vote for them. Political no way how can it be it was instigated by Labor and you know they have no idea of politics, its all about putting every one down for having an opinion.
alan | 22/10/2012 12:00 6
Derek, just stop being so silly, the carbon dioxide tax is just that another tax that Labor told everyone was not going to happen, even Labor admits that it will have absoultley no effect on the environment at all (how come 50% of the carbon dixoide tax is going into consolidated revenue and not into "Saving the planet fairy tales" it's another tax because Labor is already in the RED of more than $147,000,000,000 since 07 when there was no debt, infact they had $20,000,000,000 in there back pocket this means that they have wasted $167,000,000,000 more than all the taxes and revenue they have collected in that time. Utter disgrace. As I said, it's just another tax.
Derek Wilson | 22/10/2012 12:01 7
Try this Dave: http://www.theage.com.au/business/carbon-economy/yallourns-power-cut-proof-of-carbon-policy-success-acf-20121017-27qgx.html.
dave d | 22/10/2012 13:43 8
Derek, Wellll why didn't you just say you got the information from a Newspaper in the first place - well Gollllyyyy it must be true !!!!- now you are you are really showing who's stupid !!
Colin Spencer | 22/10/2012 14:25 9
The carbon tax won't add a lot to the trend in rising electricity prices, as price gouging on electricity started to become serious before the carbon tax was introduced. Price being the equalising factor between price and demand has predictably caused a reduction in demand for power over the past year or two. The carbon tax will simply add to the woes of generators, distributors and retailers of electricity. Invest in Solar and escape the clutches of power companies, while avoiding some of the carbon tax.
Goodie | 22/10/2012 21:43 10
Guessing is about all people can do when it comes to knowing how much we are paying as unlike the GST the carbon tax impost is not required to be shown on invoices. Gillard does not want people to be reminded of exactly how much it is costing them and no one speaks anymore of the reductions in global greenhouse gasses as they know that we know there are non. Also I would not stand by the phone waiting for a call about a job in Gillards "clean economy", you may be waiting a while. Economic experts are like experts period, few of them ever get it right.
Hayrick | 19/11/2012 14:27 11
Alf and ilk are true to form. Turns everything into an anti labour rant. The article by Saul Eslake deals in facts. Howard was the biggest tax maker/taker in recent history and look what GST or its equivalent has done to Europe where they love ramping it up to massive %. We have that to come if Libs return to power.
dave d | 19/11/2012 15:55 12
Hayrick ,what you fail to mention in your "facts"is that when Howard got voted out the economy was in the best shape that this country had seen in a long long time -in fact it was the only thing that saved Australia from falling into the same economic crisis that others suffered around the world - Ju-liar and Swanny are determined to bring this country into line with all the others & suffer the same fate.
Alf | 19/11/2012 17:35 13
Hayrick, You sound very much like my own farther, god rest his (Ar) Sole, he to voted Labor because his father did, as did all the rest of the family, all because they failed to see the forest for the trees, they too believed any thing that came out of the union rep had to be the truth and as for the Labor Government, wow they were more believable than the Pope. My advise Read more, Look around you and when you can no longer make a living or feed your family ask Julier for help and see what happens. GOD HELP AUSTRALIA
Hayrick | 20/11/2012 11:08 14
All is not as it seems. Howard presided over massive private debt explosion and siphoned off our money into the future fund to pay who? Politicians and public servants of course. If the Sh.. hits the fan it is the massive private debt that funded Howards housing led recovery and Government protection rackets - this will kill us and the banks - NOT Govt debt. that is minor in comparison. I am not saying the present Government is much improvement but Liberals are liars too and maybe your memory is failing you, or you are incurably naive. If you cannot feed your family have a look at the debt WE have built up and the monopoly rip-offs everywhere. I don't believe in God or politicians - I want to believe in my childrens future - not looking good WE all need to get together and prevent any Government from taking more than 20% of gross national product in taxes and stop the banks from draining us dry - they already take a larger proportion of wealth than any time in history and their bad behaviour exposes us all.
Alf | 20/11/2012 13:05 15
Hayrick, Yes there is some truth in what you say but not all of it ,Like it or not Howard at least had a stable Government, We knew were we were and companies worked towards a stable future and jobs were always there, The unions were under control so the economy was stable. Now look at what we have 200 new policies that don`t work , The biggest national debt ever seen before in this country and nothing to show for it, Unemployment out of control,Companies closing down in never before numbers, survivors moving out of the country daily, billions wasted on building 6 houses in NT the rest went into unknown pockets, Insulation program, my god you could go on for months. Unfortunately the Australian people were fed a pile of crap and promises by Rudd and his cabinet of amateurs and they fell for it, but the worst thing now is they are still there and still spreading the same crap.
Mark Chapel | 21/11/2012 09:03 16
The most annoying thing to me is - as has been previously stated - that this tax does absolutely nothing to reduce emissions. That is why the bulk goes to consolidated revenue. And all the great job to be created? Well, take "wind Farms" to start. All are being built by overseas companies, with fully imported parts and machinery, supervised by overseas consultants using a handful of local labour. That is the great dream of the Labor. It really is just another redistribution of wealth as anyone with half a brain can see. And in response to the garbage about Howard's gst - you do realise it was to replace other taxes and he did go to an election on it.... and won. Gillard went to an election on a lie, and sort of won due to a lot of corruption and sordid dirty deals.
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