DESPITE being one of the biggest economic reforms in Australian history, the majority of families still don’t know what impact the Carbon Tax will have on their weekly budget.
The question getting the most attention seems to be one of semantics rather than economics, whether it is a “great big tax” or an “effective carbon pricing mechanism”. But what does it all mean? How will the PM’s transition into a “Clean Energy Future” effect your bottom line?
Firstly, households do not pay the tax directly, only big polluters do. However, there will be a flow on affect for consumers and it will have an impact on everybody’s hip pocket.
The biggest impost to household will come in the form of sky rocketing energy prices. As of July 1, prices increased by 18.1 per cent in NSW, almost half of which was caused by the Carbon Tax.
According to the government’s own modelling, gas prices will rise on average by 9pc this financial year and electricity will go up by 10pc.
This means if you pay $900 a quarter in energy utilities ($400 on gas and $500 on electricity) you will be paying an extra $344 per year or find an extra $6.61 in your weekly budget.
Treasury also forecasts that the Carbon Tax will push the Consumer Price Index (CPI) up 0.7pc, meaning if you spend $300 a week on groceries you will need to find an extra $2.10 in your weekly budget.
Staple products like fruit, vegetables, milk, bread and meat will all rise by 10 cents. The hospitality industry (ie restaurants and fast food chains) will charge an extra 20 cents per meal. It is not yet known what impact Carbon Tax will have on Council rates. “We don’t expect that we will be too significantly impacted by the cost of increasing electricity prices on our streetlights, as we managed to lock in a deal on that before the latest electricity price increase,” Mayor Geoff Kettle explained.
“It appears at this stage that our three waste management centres will be under the emissionproducing threshold, so the carbon pricing will not apply to those.
“We are still looking for clarification on a number of matters regarding the carbon pricing, including how it will impact on our light and heavy fleet.” It isn’t all bad news though. Fuel won’t be affected by the carbon price and the federal government has announced a raft of compensation measures to ease the financial burden. Firstly, if you make less than $80,000 a year you will receive a tax cut.
The tax free threshold for low income earners has trebled, from $6000 to $18,200. When combined with the Low Income Tax Offset, people who make less than $20,542 will not have to pay any tax at all. Middle income earners will also get a tax break.
Pensioners are eligible to receive household assistance that at least offsets all of their expected average price rises under a carbon price.
They will receive an amount of assistance equivalent to a 1.7pc increase in the maximum rate of the pension. This is an increase of up to $338 a year for singles – equating to $6.50 a week – and $255 for each eligible member of a couple – an increase of $4.90.
Part-rate pensioners will receive the same amount as maximum-rate pensioners The Clean Energy Supplement will be paid in line with pensioners’ regular payment cycles from March 20, next year, be indexed by CPI to ensure its value is maintained over time, and is in addition to the existing supplement.
Over the past two months, pensioners will also receive a separate Clean Energy Advance, paid as an upfront, tax exempt lump sum payment of up to $250 for a single and $190 for each eligible member of a couple. The Family Tax Benefit will also increase by 1.7pc, which equates to $110 per child per year for Part A ($2.11) and $69 for Part B ($1.30).
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