The carbon tax: What your business must know

3. Minimising the impacts

Every business in Australia will be impacted by the introduction of the carbon tax, whether directly or indirectly. Here are seven steps for preparing your business.

1. Review your current expenses and those incurred over the past year to identify energy-intensive costs that will be affected by the inevitable energy price rises.

   Direct costs may be fuel, electricity and gas, while indirect costs may be business travel, freight and waste removal. Work with your accountant to ensure you have all your bases covered.

2. Gain a deeper understanding of where additional costs may be incurred.

   Ask your suppliers about what they see as the effect on their business, and when they will be able to tell you what their price impacts will be.

3. Highlight potential cost savings by exploring ways to reduce your consumption of goods and services expected to be directly and indirectly affected by the carbon tax.
4. Consider locking in contracts with key suppliers now, at pre-carbon tax rates.
5. Conduct an energy audit to measure your business’ carbon footprint, and identify ways in which you can reduce its direct energy consumption and costs.
6. Review your key business processes, and identify areas where you could be operating more efficiently by changing processes, upgrading equipment or retraining staff.
7. Analyse your current pricing and how the additional costs may impact your profit.

   This is an important step as it will give you the confidence to justify any price increases, not only to customers but also to the Australian Competition and Consumer Commission.

   The ACCC has produced the Carbon Price Claims – Guide for Business.

   This guide is designed to help businesses understand their rights and obligations, ensuring price increases are not misrepresented as being the result of the carbon tax.

4. Carbon tax complaint hotline

Business owners will certainly have to be on their toes over gouging – this week sees the launch of a new ACCC telephone hotline for carbon price complaints and inquiries.

“The ACCC is concerned that consumers may be duped into accepting a price increase for a product or service because of the carbon price, when the carbon price is actually not the cause,” ACCC chairman Rod Sims said at the hotline’s launch.

“Through the Carbon Price Claims Hotline, the ACCC invites complaints about false or misleading carbon price claims.”

“While businesses are free to set their own prices, if they make claims about the impact of the carbon price these need to be truthful and have a reasonable basis.”

The message is clear – if you raise your prices sharply and use the carbon tax as a fig leaf, be prepared to be caught out.

“If a business does move their prices – and that’s a decision entirely for the business owner to make – if they tell their customers it’s due to the carbon price, they must be able to back that up,” Schaper says.

“If you move your prices and say it’s for a variety of factors, that’s really going to be fine. If you say it’s all due to the carbon price, be aware you will need to justify that.”

“We’re not out there to police and hunt down small businesses… But be careful about what you tell your customers.”

5. Gaining a competitive advantage

According to MYOB, the introduction of the carbon tax will result in opportunities for your business. In order to take advantage of these opportunities, you need to:

• Understand the impacts of the tax on your customers. This will enable you to time your marketing and sales activities to encourage consumers to buy your products and services.

  The government will be offering personal income tax cuts and increases in pensions, allowances and benefits to help compensate for the impact of the tax on the cost of living.

  As a result, some consumers will have what they see as more disposable income and will be prepared to spend this.

  Alternatively, some may be wary of spending as they wait and see the result of energy price rises.

• Investigate the carbon tax-related financial incentives, and federal and state/territory government programs available to businesses and those in your specific industry.
• Consider investing in capital equipment to enable productivity increases, and take advantage of the instant tax write-offs for business assets.
• When investigating your supply chain, search the market to identify any low-carbon products or suppliers who can assist with a more efficient, low-carbon process change.
• If you are looking to recruit new staff, consider how you can take advantage of the significant increase in the tax-free threshold.

  The tax-free threshold will increase to $18,200 and will encourage more part-time workers to return to the workforce as it becomes more financially viable.

  Business owners could potentially draw from a larger pool of skilled people when employing new staff, while payroll for some part-time employees will be simplified.

• With environmental responsibility becoming increasingly important in customers’ eyes, consider how you can best promote your initiatives to reduce your carbon footprint.

  For example, your website, point of sale, email signature, newsletters and social media avenues.