Please use this identifier to cite or link to this item: https://hdl.handle.net/1959.11/17786
Title: Household Distributional and Revenue Recycling Effects of the Carbon Price in Australia
Contributor(s): Sajeewani, Disna (author); Siriwardana, Mahinda  (author); McNeill, Judith  (author)
Publication Date: 2015
Open Access: Yes
DOI: 10.1142/S2010007815500128Open Access Link
Handle Link: https://hdl.handle.net/1959.11/17786
Open Access Link: http://ro.uow.edu.au/buspapers/862/Open Access Link
Abstract: The Australian Government introduced a carbon tax from 1 July 2012. The then opposition party leader, now Prime Minister, introduced legislation to repeal the tax. Amongst the many issues being debated is that of the incidence of the tax. In this study, we explore household consumption and income changes arising from a A$23 carbon price employing a computable general equilibrium model (entitled A3E-G). The model has been calibrated using a social accounting matrix database of Australia with 10 household income groups. This carbon price generates A$6.39 billion revenue while reducing Australia's carbon emissions by 11%. The empirical evidence suggests household level impacts range from proportional to mildly progressive tax incidence. In this study, we propose four revenue recycling options to overcome any undesirable distributional effects from the carbon price. Results indicate that revenue recycling through income tax reductions and uniform lump sum transfers improves post tax income levels and welfare towards middle and high income groups. A nonuniform lump sum transferring option favors low income households. Uniform reductions in commodity tax rates are not found to be welfare improving but we find positive impacts on export competitiveness from this option.
Publication Type: Journal Article
Grant Details: ARC/DP0986306
Source of Publication: Climate Change Economics, 6(3), p. 1-23
Publisher: World Scientific Publishing Co Pte Ltd
Place of Publication: Singapore
ISSN: 2010-0086
2010-0078
Field of Research (FOR): 140205 Environment and Resource Economics
Socio-Economic Outcome Codes: 919901 Carbon and Emissions Trading
Peer Reviewed: Yes
HERDC Category Description: C1 Refereed Article in a Scholarly Journal
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