Effects of the Proposed Australian Carbon tax: A CGE Assessment

Title
Effects of the Proposed Australian Carbon tax: A CGE Assessment
Publication Date
2011
Author(s)
Siriwardana, Mahinda
Meng, Xianming
( author )
OrcID: https://orcid.org/0000-0002-3329-5277
Email: xmeng4@une.edu.au
UNE Id une-id:xmeng4
McNeill, Judith
Editor
Editor(s): Ruhul Salim and Tanzil Hoque
Type of document
Conference Publication
Language
en
Entity Type
Publication
Publisher
World Business Institute
Place of publication
Melbourne, Australia
UNE publication id
une:10315
Abstract
The Australian government has announced to price carbon at an initial price of $23 per tonne. Despite detailed modelling undertaken by the Commonwealth Treasury, there is widespread speculation about the possible economic impact of a carbon tax in Australia. In this paper we build a computable general equilibrium (CGE) model incorporating many new features to deal with the issue of emissions and model the impact of carbon taxes. The analysis undertaken by simulating the impact of a carbon tax of $23 a tonne reveals some interesting outcomes. For example, in the short run, Australia's real GDP may decline by 0.68 percent, consumer prices may rise by 0.75 percent, and the price of electricity may increase by about 26 percent as a result of the tax. Nevertheless it allows Australia to make a substantial cut in its CO₂ emissions. The simulation results imply an emission reduction of about 12 percent in its first year of operation. The tax burden is unequally distributed among different household groups with low-income households carrying a relatively higher burden.
Link
Citation
Proceedings of the World Business and Economics Research Conference, p. 1-19
ISBN
9780980827965
Start page
1
End page
19

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