Meng, Xianming

Siriwardana, Mahinda

McNeill, Judith

2013

To fulfil its emission reduction target pledged in the Copenhagen accord, the Australian Government has determined to introduce a carbon tax from July 1st 2012. This paper simulates the effects on the environment and on the economy of a carbon tax of A$23 per tonne of carbon dioxide proposed by the government with, and without, a compensation policy. We employ a computable general equilibrium model with an environmentally extended Social accounting matrix. According to the simulation results, the carbon tax can cut emissions effectively, but will cause a mild economic contraction. Because the price signal is intact, the proposed compensation plan has little impact on emission cuts while significantly mitigating the negative effect of a carbon tax on the economy.

Environmental and Resource Economics, 54(3), p. 313-332

1573-1502

0924-6460

https://hdl.handle.net/1959.11/12146

Springer Netherlands

The Environmental and Economic Impact of the Carbon Tax in Australia

Journal Article

Publication