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Business groups wait for confirmation of $23-a-tonne carbon price

Thursday, 7 July 2011 | By Michelle Hammond
Business groups are eagerly awaiting full details of the carbon tax to be released on Sunday, with reports suggesting the scheme will kick off at $23 per tonne.

 

The carbon tax is expected to commence with a starting price of $23 a tonne, with the government slashing the number of companies affected from 1000 to 500.

 

The rumoured $23 price is a compromise between Labor – which was seeking $20 – and a much higher price put forward by the Greens.

 

Government modelling based on a $20 price shows a carbon tax would cost the average family about $7.80 a week or $406 a year, with 70% per cent of households are expected to be compensated.

 

Full details of the tax, which will change to an emissions trading scheme within three to five years, will be released by the government on Sunday.

 

Greg Evans, director of economics and industry policy at the Australian Chamber of Commerce and Industry, refused to comment on the $23 price.

 

“It’s all speculation at the moment – we’re waiting for Sunday’s announcement,” Evans says.

 

Peter Strong, executive director of the Council of Small Business of Australia, says he is also waiting to see what happens on Sunday, although the price is not his only concern.

 

“With small business it’s as much about communication as it is about the price … hopefully they take us into account in the language they use at least,” he says.

 

“If you’re a home-based business the impact of a carbon tax price will be very different than for a retailer in a shopping mall or a truck driver.

 

“We’re not against the carbon tax but we want to make sure we’re not impacted more than others and we don’t wear the cost.”

 

Strong says it will be interesting to see whether the government puts a cap on the carbon price for, say, the first three years.

 

“We want to know how far it will go up and whether there will be a cap …. we also want to know which sectors will be affected so we can start running our businesses based on that information,” he says.

 

Last week the government announcement that small businesses would be exempt from petrol price increases under the carbon tax received mixed reviews from the business community.

 

While COSBOA supports the move other groups warn that it could distort the economy.

 

Peter Anderson, chief executive of the Australian Chamber of Commerce and Industry, told StartupSmart the exemption for small businesses would not provide any real relief.

 

He said some businesses would end up paying more, which could lead to higher prices for consumers or job losses.

 

“Some small and medium-sized businesses will end up paying a disproportionate part of the cost burden and may pass it on to households through employing fewer people or passing it on in higher prices,” Anderson said.

 

Charmian Barton, a partner at law firm DLA Piper, says once the details of the carbon tax are unveiled on Sunday businesses must begin preparing to ensure compliance.

 

According to Barton businesses may not be aware of the legal considerations that need to be addressed before the carbon tax is introduced.

 

“Businesses will need to develop strategies to prepare for the commencement of the carbon tax such as cost pass-through, contract review clauses and financing arrangements,” Barton says.

 

Aside from the tax implications Barton has identified key areas on which businesses will need to obtain advice before the price on carbon is implemented, including:

  • Reviewing contract documentation, including leases and construction contracts, to ensure they take account of pass-through payment of the carbon tax.
  • Intellectual property protection of established and emerging renewable energy and low emission technologies.
  • Negotiating and documenting carbon transactions and the establishment of carbon funds, including any tax consequences.