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AAA Rejects Call for Carbon Tax

6.3.2008

Australia’s peak motoring body, the Australian Automobile Association, today reiterated its support for the Federal Government’s position on a carbon emissions trading scheme, as opposed to a carbon tax.

In voicing its support for an emissions trading scheme, AAA rejected a proposal by Caltex to introduce a carbon tax – media reports indicate that such a tax would add 10cpl to the price of petrol and diesel.

AAA Executive Director, Mike Harris, said the AAA motoring clubs believe the Government should include fuels in an emissions trading scheme rather than a carbon tax, as a response to greenhouse emission and climate change.

Mr Harris pointed out that the essential difference between emissions trading and a carbon tax is that, with emissions trading, government sets emission reduction levels to be achieved and the market determines the price of carbon with an emissions trading program, whereas under a carbon tax the government sets the price of carbon and the tax produces the emission level.

“The cap and trade approach is consistent with one of the Government’s tests for an emissions trading scheme – that it would effectively reduce emissions – while a carbon tax would be seen by motorists as just another tax and would not necessarily have the desired effect of reducing emissions,” Mr Harris said.

“Motorists are already paying 38cpl for petrol and diesel and only 9cpl of this is going back into roads.  It could be argued that the difference is already a carbon tax.”

Mr Harris identified three main options for including road transport in emissions trading – individual motorists, car manufacturers, and fuel refiners/marketers.

“Making refiners or marketers the point of acquittal in an emissions trading system around the transport sector could be covered with a small number of obligated entities and has significant advantages,” he said.

“Particularly since fuel refiners and marketers have the resources and capability to participate effectively in an emissions trading system.”

Mr Harris said AAA considered an emissions trading scheme covering the transport sector is best applied through emission permit obligations on upstream petroleum refiners and importers, and the following principles should apply:

  • The scheme should include all industry sectors and all automotive fuels;
  • The scheme should be tailored to Australia’s needs, in line with international goals;
  • Federal Treasury should conduct and publish economic modelling on the effects of emissions trading; and
  • Fuel taxation should be reformed and road pricing introduced ahead of the introduction of any trading scheme.

 

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