Last week the Australian Prime Minister, Julia Gillard, announced that carbon emissions would be taxed from July 1, 2012.
The Prime Minister explained that by making products that generate carbon emissions more expensive, people will use less of them and this will be a good thing for Australia.
For example, if the carbon tax increases the average Australian family’s electricity bill by $500 and the electricity bill of an average small business by $2,000, families and businesses will use less electricity and this will be a good thing for Australia.
At the same time the Prime Minister announced the tax, she explained that families would be compensated for any increase in electricity charges. But how will families be compensated? The Prime Minister must be careful that families are not compensated in a way that would result in them using more electricity.
Indeed, wouldn’t it make more sense if the Prime Minister didn’t compensate anyone for the tax?