Thursday, July 17th Australian Prime Minister Tony Abbot and his conservative government followed through on one of its promises to the people during the previous election to repeal the country’s Carbon Tax that was constricting the economy. While the left and environmental groups will undoubtedly clamor about the recent Senate vote (39-32) to repeal the carbon tax, there is little doubt that the Australian government did the right thing.
Australia’s carbon tax cost the country billions of dollars each year, draining the Australian economy of approximately $8.5 billion annually all while forcing ordinary families to pay more than an average of $500 more for power each year. With the repeal of the often maligned carbon tax, Australia has repositioned itself as a safe place for investment in crucial industries such as mining. Furthermore, by eliminating the carbon tax, Australian businesses and families will have an unnecessary burden lifted off their shoulders, paving the way for more jobs and future economic growth.
The United States can and should take note of Australia’s decision to repeal the carbon tax if it wants to protect itself from skyrocketing energy prices. While the Left and environmental groups in the U.S. continue to push for Cap and Trade and various forms of carbon taxation, they fail to apply basic economics in their rational. Simply put, by taxing carbon indiscriminately it increases the cost of business for that company, therefore reducing profits and threatening jobs. However, the negative externalities do not end there. The increase cost of business due to carbon taxes are sent along the supply chain, leading to the prices of inputs and commodities to increase. These increased costs are eventually passed on to taxpayers like you not only when you go to fill up your tank, but when you go to buy that carton of milk from your local grocery store as well.
On June 2nd 2014, the EPA officially released its new draft rule to force power plants to cut carbon emissions by 30% (from levels of 2005) by the year 2030. This ideologically driven mandate will have dire consequences on the U.S. economy. The administration’s climate agenda is poised to devastate the US economy. As Amy Harder of the Wall Street Journal notes, coal produces more carbon dioxide than oil and natural gas but it is by far the most abundant and cheap source of energy in the U.S. Coal, which provides 40% of electricity in the United States and the new regulations threaten to not only raise the cost of electricity but also threaten jobs in the industry.
The Chamber of Commerce analyzed a similar rule as the EPA’s and found that such regulations would cost the U.S. economy an average of $51 billion annually. From 2014 to 2030 that is an estimated $816 billion drain from the U.S. economy. Additionally, the report notes that the carbon regulation’s would cost the US 2,224 jobs annually through 2030, which means in total it would cost the US approximately 3,584,000 jobs. Furthermore the Chamber notes that energy costs for US taxpayers would increase by $289 billion, and reduce the amount of disposable income for families by approximately $596 billion. Simply put, given the failing economic recovery, the U.S cannot afford losing an additional $816 billion from the country’s GDP, nor does it make sense to prevent millions of Americans from finding jobs, or increase energy costs for households which hurt the least wealthy most of all.
Australia has shown the US a way to escape the grasps of over burdensome regulations pushed by the ideologically driven left that constrict economic growth and prosperity and now the U.S. must follow if it wishes to remain among the most competitive countries in the world.