The proposed "Carbon Tax" - will it work??

A carbon tax will make no difference to CO2, especially as wage increases will be demanded so people can maintain their standard of living.

My memories of economics from many years ago suggest that whilst price increases may have an effect on the purchase of luxury items, that relationship does not apply to the basics. As power, food and transport (probably the main "intensive CO2" industries) are all classed as necessities, it would seem fairly obvious that an increase in price of such items will not result in a decrease of usage. Indeed the most recent increase in the cost of power caused wails of protest in the media - who knows what will happen when people find out that IPART is recommending another 11% increase (of course that report has been delayed until after the election!).

It's also interesting to ponder what will actually happen. The "local"Australian producers will have to incorporate the carbon tax in their prices, but how does the government intend to apply that tax to imports? Unless the tax works like the GST, and is applied at the point of sale, who will pay the carbon tax on a can of beef from Argentina? I'm fairly sure that you can't send a bill to an Argentinian company, and to attempt to charge it via import duties would be fraught - who knows how much CO2 that Argentinian company is emitting? Of course if the tax is not applied to imports, then the price of locally produced goods will increase, but the price of imported items won't. Given the Colesworth desire to make sales ay any cost, I can't see them refusing to use imported product, in fact I'd bet they'd replace local (expensive) product with imported (carbon tax free) goods to maintain or increase sales. And why should we believe that those imported goods, plus their transportation, have emitted less CO2 than locally produced goods?

The entire thing is a joke, and fraught with problems. It will, however, create a new income stream for the government, and probably make those (wealthy) people who don't think about the details feel good. It will also make the financial "numbers" bigger, which is after all the main aim of economists (they call it "growth"). It will probably result in a reduction of Australian exports (which will be more expensive when compared to "local" produce in countries that don't have such a tax) and also increase our imports (which will be cheaper as they won't have to contend with a carbon tax whilst Australian products will). The one thing I can't see it doing is reducing CO2 emissions, even on a local scale. On a global scale Australia produces next to nothing (which is why the government have to keep shouting "per capita"* - we have a massive land area and few people!) so it will make no difference at all.

* "Per capita". Australia has a huge amount of land, and some very intensive CO2 industries. The large area (and relatively extreme climate) means that transport and power emissions are higher than a geographically small country with a temperate climate, however they are shared by a very small number of people - the entire population of Australia is only about 10% larger than the population of NEW YORK (that's just one city!!!!). The result is that "per capita" we have high CO2 emissions. If we imported another 25million people we would still be a small country, but our "per capita" emissions would have halved......