$23 per tonne carbon tax tipped to target fewer companies

The carbon tax is expected to target less than 1% of companies but will cost around $4 billion over four years following a promise to exclude SMEs and households from fuel price hikes and to offer compensation to other manufacturing businesses.

According to reports the government promise to exclude fuel in the carbon tax has halved the number of companies to be targeted under the tax to 500 and will leave just 0.002% of businesses directly exposed. 

The tax, which will exclude fuel suppliers, distributors and firms emitting synthetic greenhouse gases, is widely tipped to be priced at $23 per tonne but Health Minister Nicola Roxon has refused to confirm the figure.

Prime Minister Julia Gillard said this morning the “figure of 500 strongly reinforces the point this is being paid by a limited number of big businesses.”

The compromise over the price placed on carbon and the reduced number of companies targeted suggests that the government is focused on getting an initial system in place to reduce emissions and minimise potential political damage from voter backlash.

The government is set to announce details of the tax on Sunday after several months of negotiations on the policy with Greens MPs and key independents.

It expects to introduce legislation later this year with the tax to become effective in July 2012 before changing to an emissions trading scheme in three to five years.

Treasury modelling released this week said a $20 price would cost the average family $406 per year before compensation. The Government says 70% of Australians will be fully compensated.

The Government will need three crucial votes to get its carbon deal with the Greens through parliament’s lower house.

Independent MPs Rob Oakeshott and Tony Windsor, who pushed for household and SMEs to be exempt from petrol price rises as part of the talks, have indicated that they will support the bill but independent Tasmanian MP Andrew Wilkie says his support is conditional on a couple of things.

Wilkie, who did not help to formulate the policy as part of the Multiparty Climate Change Committee, wants to protect workers at a zinc plant in Hobart.

He says people on low incomes must be properly compensated and there must be a high level of investment in renewable energy sources.

Other key MPs – independent Bob Katter and National Tony Crook – oppose the scheme.

The carbon tax is seen as a test for Prime Minister Julia Gillard.

Climate change has been a difficult issue for Labor and the Coalition, with both promising an emissions trading scheme during the 2007 election and Kevin Rudd’s carbon pollution reduction scheme voted down by the parliament.

Both parties have targets to reduce emissions by 5% below 2000 levels by 2020 but under Opposition Leader Tony Abbott the Coalition is focused on direct action – paying companies to reduce carbon emissions rather than imposing a carbon price on business.

A Lowy Institute poll released at the end of June showed 41% of Australians wanted to take action against global warming.

Greens Leader Bob Brown has poured cold water on a promise by Opposition Leader Tony Abbott to remove the tax if he wins the next election, pointing to the Greens’ balance of power in the Senate.