The Carbon Tax – when is a tax, not a tax??

According to the official figures, the Carbon Tax has added about 0.4% to the cost of living for the typical household. Doesn’t sound much, at 0.4% but lets take a deeper look at what that means in reality.

Referring to a report on electricity prices from the Department of Resources, Energy and Tourism, over the past four years, electricity costs for households has risen on average by around 70% nationally. That’s right SEVENTY per cent increase in the past 4 years!! Isn’t this supposed to be regulated?

Carbon TaxI looked at my last bill for home – $900 for the quarter – but then that is for 2 people and frankly, we are rarely at home. Our neighbours came in at double that! But $900 a quarter is $3600 a year and that is after tax – probably closer to $4400 of pre tax income (based on an average tax rate of 22%). With the ATO reporting a median income of around $48,700 that means 9% of income going on Electricity!! Best make sure you turn the lights off, only use the beer fridge in the summer and maybe go the Hills Hoist over the tumble drier!

To be fair, there are a number of assumptions in the above calculations but the point is that there has been a substantial real cost increase for households.

What about for Industry?

According to Tourism Accommodation Australia, the Carbon tax has reduced profits by around 12% in the accommodation industry.

The Australian Retailers Association conducted a survey – 80% of business say that have been negatively impacted by the carbon tax.

The Australian Industry Group surveyed 485 businesses – and the Carbon Tax was estimated to have increased energy prices by 14.5%. Manufacturing has been amongst the hardest hit, especially given an inability to pass on the cost rises – margins are squeezed.

The Australian Trucking Association has thus far avoided any impact, with the trucking sector being exempt until July 2014. Not so fortunate have been the airlines, with no exemption and compounded by already paper-thin profitability and an inability to pass on costs.

So what is the future for the Carbon Tax?

The media this week is awash with speculation over the future of the Carbon Tax and the answer to that really depends upon who you ask!

Under a Liberal/Abbott government it will be scrapped – I heard this right from the horse’s mouth over breakfast a few weeks ago – Click here for article.
Under our current PM, there has been a statement on moving to an Emission Trading Scheme – still the same issues, just a different name. The switch – which is reported to cost in the order of $4bn, will be funded by “cuts elsewhere”.

In reality, has the tax really helped the environment?

I was in Singapore a couple of weeks ago – the air pollution index is normally around 75 at this time of year – but 3 weeks ago reached a record 400. This basically means “Not Safe” to go outside. The source of the problem was its neighbour, Indonesia, where forests continue to be burned down to make way for Palm oil plantations. So, has having a heavier burden on industry and consumer alike done much for the environment – probably not. Has it made Australian business less competitive, yes! Has it cost the public more through cost of living rises – absolutely!

So the age old question – irrespective of Government what can you do to shield yourself from the cost pressures associated with the Carbon Tax? Earn more income, and covered calls provide a great starting point for that and we would love to show you how click here

Originally from the UK, Andrew has been a market professional for almost 19 years, trading a wide range of global markets and instruments. As a highly regarded industry speaker, he has spoken alongside Sir Richard Branson, Robert Kiyosaki, Anthony Robbins and Tony Blair, empowering many thousands of people, from all over the world, with the skills, techniques and ...
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