The Impact of the Australian Carbon Tax on Industries and Households

Sam Meng, Mahinda Siriwardana () and Judith McNeill
Additional contact information
Sam Meng: Dr Sam Meng (corresponding author) and Dr Judith McNeill are at the Institute for Rural Futures, University of New England, IRF, UNE, Armidale, NSW, 2351, Australia, emails: xmeng3@une.edu.au and jmcneill@une.edu.au.
Judith McNeill: The authors would like to acknowledge funding from the Australian Research Council under Discovery Project DP0986306.

Margin: The Journal of Applied Economic Research, 2014, vol. 8, issue 1, 15-37

Abstract: With the new Australian Government and various interest groups objecting to the Australian carbon tax, public opinion about pricing carbon is divided. Some of the disagreement may be due to misunderstandings about the effects of the policy. In an effort to clarify some of the issues, this article reports the simulated effects of a carbon tax of A$23 per tonne of carbon dioxide on different economic agents, with and without a compensation policy. We employ a computable general equilibrium (CGE) model with an environmentally extended social accounting matrix (SAM). At the sectoral level, brown coal electricity, black coal electricity and the brown coal mining sectors are big losers. The effect on various employment occupations is mildly negative, ranging from −0.6 per cent to −1.7 per cent, with production and transport workers worst affected. According to household utility projections, low-income households suffer more from a carbon tax and benefit more from the proposed compensation policy. However, the commonly used equivalent variation (EV) tends to reverse this conclusion. JEL Classification: H23, H31, H32, Q52, Q54

Keywords: Carbon Tax; CGE Modelling; Sectoral Effect; Distributional Effect (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:8:y:2014:i:1:p:15-37

DOI: 10.1177/0973801013506399

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