If you turn on the news any night of the week, chances are you’ll hear Tony Abbott refer to Australia as home of the "the world’s biggest carbon tax".
The Opposition leader hasn’t provided any evidence for this claim, but that hasn’t stopped the media from reporting it. The ABC, Yahoo, Fairfax and News Ltd have all run Abbott’s refrain without verification.
But is it actually true?
Answering that question isn’t easy. Different countries use different measures to price carbon so we need to look at the source of the carbon, the use of the carbon source, and whether the tax or price is applied to carbon as an input or to carbon as an output. For example, Costa Rica applies its carbon tax of 3.5 per cent directly to the price of fossil fuels while other countries apply the tax to CO2 emissions.
Matters are further complicated by the differential application of taxes to energy output units according to the energy source, such as those cited for the UK, where taxes in $/kWh or $/kg vary between electricity, liquefied petroleum gas or solid fuel.
Incentive payments, compensatory subsidies and tax returns like those Australia will soon employ also complicate attempts to calculate the relative magnitude of carbon taxes from one country to the next, as do exchange rates and the relative wealth of any given nation. For example, according to World Bank statistics Australia is one of the world’s wealthiest nations with a gross national income per capita (GNI) of US$43,740, while China’s is US$4620 and India’s only US$1340.
To compare their carbon taxes with Australia’s in absolute terms, as did another report decrying our carbon tax as the world’s highest, is misleading. The International Business Times, having stated "the fact remains that Australia’s carbon tax is the most expensive in the world" expressed outrage that "Australia’s carbon tax price is far higher than prices imposed in Europe…" According to the report, our "…carbon tax is 23 times bigger than India’s".
To nit-pick: if India’s is $1.07 per tonne, Australia’s is 21.495 times bigger. However, Australia’s GNI is 32.64 times higher than India’s so on a per capita GNI basis India’s carbon tax is actually significantly higher than Australia’s.
A surprising number of countries have been operating carbon taxes in one form or another since the 1990s. These countries include Sweden, Norway, the Netherlands, Denmark and Costa Rica. Finland, which was the first, introduced a carbon tax in 1990. Other nations with some form of
carbon tax pending or in place include South Africa, China, Ireland, Switzerland and India.
This report lists the countries around the world that already have a carbon tax or intend to introduce one soon.
Although they have no national program as yet, some states in the US and Canada also employ carbon taxes. For example Canada’s British Columbia levies a carbon tax of CAD$25/tonne rising to $30 this year. Last year The Economist, reporting on British Columbia’s carbon tax, said that it "has not weakened the province’s economy" but rather: "despite the levy,the economy is doing well". Tony Abbott might like to note that British Columbia’s main export commodity is now coal, and that The Economist thinks its carbon tax is a bit low.
So is our carbon tax the biggest? The short answer is no. In absolute terms that honour appears to belong to Sweden with reported rates of up to US$150 per tonne.
According to a 2009 US Department of Energy report, Sweden applied a "standard" rate of US$104.83 per tonne of CO2 and an "industry" rate of US$23.04 per tonne of CO2, Norway’s tax ranged from US$15.93 to US$61.76 while Finland applied a rate of US$30 per tonne. Earlier this
year the Climate Institute released its Global Climate Leadership Review 2012 where Sweden’s carbon price was given as US$130/tonne CO2 — while other sources estimate it as $150/tonne.
Sweden, Holland, Finland and Norway have all had carbon taxes since the early 1990s and they remain among the world’s wealthiest nations despite relatively high carbon taxes, welfare entitlements, and the impact of the global financial crisis in Europe.
If the wealthier nations are doing well enough despite having carbon taxes, how have the less wealthy fared? Costa Rica, with a reported GNI of US$6580, while not as poor as China or India, is significantly poorer than Australia. Its population is less than a third the size of Australia’s so it too could argue, as some in Australia have, that its global carbon footprint is minimal — but it doesn’t.
In 1997 Costa Rica introduced a carbon tax of 3.5 per cent levied on the market price of fossil fuels and it aims to be carbon neutral by 2021. In the recently released Yale University environmental performance index Costa Rica was placed fifth behind Switzerland, Latvia, Norway and Luxembourg while Australia was 48th. Despite its developing nation status and its environmental credentials, Costa Ricans appear to be neither impoverished nor wretched, scoring highly with life satisfaction in the World Happiness Report recently launched at the United Nations.
On balance, the alarm being spread about the carbon tax in Australia, which has contributed to its low level of public support, seems unwarranted. China and India are the most populous nations on earth and as such have the potential to exacerbate human induced climate change. However, they also have a significant number of people living in poverty who, unlike the poor of Australia, Sweden, Holland, Finland and Norway, are moving towards reducing carbon emissions without access to the same safety net of welfare entitlements.
Australia needs to have the carbon debate, but let’s try to keep it honest — repetition does not make a statement true, and misinformation does not advance a debate. If Tony Abbott does really believe that Australia has "the world’s biggest carbon tax", he should have to prove it.
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