SME and household fuel costs to be excluded from carbon tax

Small businesses and households will be exempt from paying a carbon tax on petrol “now and in the future”, Prime Minister Julia Gillard said at the weekend as she announced that around 280,000 self-funded retirees are set to receive compensation when the tax is brought in next July.

The announcement comes after various surveys showed the carbon tax remained a key concern for SMEs, with independent MP Tony Windsor arguing that Australians in regional and rural areas have little choice but to use private vehicles, unlike their city counterparts.

The Prime Minister told ABC Television’s Insiders program yesterday that “families, tradies, small business people do not have to worry about a petrol price increase.”

“The design of this scheme is that carbon-pricing petrol will be out now and out for the future,” Gillard said.

She said while Opposition Leader Tony Abbott had been “trying to persuade Australians that petrol prices will go up” in fact they “will not be touched by carbon pricing.”

Abbott, who has promised to repeal the tax should the Coalition win the next election but keep in place proposed tax cuts, said Gillard’s promise that fuel would be excluded was about as believable as her pre-election statement that there would be no carbon tax.

“The best way to protect the struggling families of Australia from higher costs is to dump this bad tax,” Abbott said.

A carbon tax priced at $25 per tonne was expected to add 6 cents per litre to fuel costs but big business will be exempt from a carbon tax on fuel and it is widely expected that fuel tax concessions now in place will be scaled back.

Greens Senator Bob Brown doubts that SME and household fuel costs could remain exempt indefinitely, saying “forever is a very brave word in politics”.

“Down the line I think there is an inevitability that all fossil fuels will, under the weight of evidence that they should, pay the full cost of the creation of climate change,” Brown said.

The Australian Chamber of Commerce and Industry has warned against exemptions.

ACCI chief executive Peter Anderson told Sky News that “if you start exempting particular products or particular industries or particular groupings you simply transfer the costs of that tax in a way that becomes more burdensome for those that are not exempted and not excluded.”

The Greens, who have the balance of power in the Senate, agreed to the SME and household exemption in return for a Productivity Commission review of the fuel excise.

The party believes the excise regime should move from a simple revenue raiser to a real driver for change, taxing more-polluting fuels more and cleaner fuels less.

The Government said at the weekend that compensation for more than three million pensioners would be matched by payments for self-funded retires holding a Commonwealth Health Care Card, with payments made provided quarterly.

Treasurer Wayne Swan says about “nine out of ten households will receive some form of help for their household budgets and the vast majority of those 7 million households won’t be a single cent worse off because of the carbon price.”

He said the final design of the scheme and the “generous assistance package” would be announced “in the very near future”.

The Greens this morning flagged a broad-reaching announcement this week.

Labor and the Coalition have targets to reduce Australia’s carbon emissions by 5% by 2020 from 2000 levels.