So, it’s been about a week and the Coalition scare mongering campaign over the carbon tax introduction has apparently started to do its expected damage, with the announcement of the Newspoll today that show Labor as being less popular than leaving your kids alone with a Catholic priest at 30% primary support. Nothing much else has happened federally in the last week, so the drop must be mostly due to people who were polled believing the Coalition’s spin, or they believe that if ignored long enough, the climate change issue will go away. In either case, the only way you could believe either of these alternatives to the carbon tax is to be wilfully ignorant.

If you believe that the issue of climate change is going to just go away, then I hope you don’t have any kids. Not because you shouldn’t be allowed to breed, but because I am a nice guy and don’t wish to see the results of your ignorance to be manifested on anyone’s kids.

The other option also requires wilful ignorance, because the detail has been out there for quite a while. You can have a look a the Coalitions direct action policy and my analysis of it from more than a year ago (!), and it clearly shows more than $700 million in spending per year.

This week, Tony Abbott has been out demonising the carbon tax proposal as something that will kill the economy (a lie that I will deal with separately), and putting forward the contention that the direct action policy is (1) better; (2) that no one’s costs will rise; and (3) that it can be implemented with no additional taxes. It’s the life is all ice cream and no pain approach to climate change.

This is where wilful ignorance comes in, because you don’t need to be Paul Krugman to recognise that if a government is going to spend more than $700 million a year in picking winners in the emissions reduction area through paying for the abatement out of the federal budget, and they aren’y going to raise taxes to fund that spending, then clearly budget cuts in other areas are going to have to pay for them. The cuts are likely to come in areas that the Coalition does not approve of, so expect to see funding for things like public schools, public transport, public health care and pretty much anything with a public in it to get a cut in the next Coalition-prepared budget. And if you rely on any of those public things that get cut, your costs to replace them will go up.

Its a pity that honesty doesn’t poll well, because a carbon tax is simple, direct and honest (even if I let people lie and call it a tax). Once again, here is how it works:

• Government makes anyone who is a major emitter of CO2-equivalent (CO2-e) gases pay for each ton of those emissions annually;
• They eat those costs, or pass them on to the buyers of their goods or services (probably the latter);
• The government uses some of the money raised to support long term shifts to alternative energy sources through research, low interest loans and other incentive programs; and
• The government returns any left over money to the taxpayers to offset their rise in cost (if any).

You may not like it, but a carbon tax is at least honest and will do what it says it will.

If I had any control over the situation, I would also apply the tax to all significant imports to the country that have high CO2-e intensity to address issues of major industries here that face significantly rising costs that large polluters elsewhere do not have to pay. That way, I can use local law to also influence behaviours of foreigners who want to sell their stuff in my market. Now that’s what I call effective tax policy.