The Economic Destruction of the Carbon Tax

Dr Henry Ergas, one of Australia's leading economists, writes in today's Australian (paywall protected):

NEXT year, each man, woman and child in this country will pay $450 in electricity charges for "green schemes", including the carbon tax, renewable energy targets and solar feed-in tariffs.

That totals more than $10 billion; but not even Julia Gillard claims those outlays get us anywhere near that amount in environmental benefits.

Indeed, far from trying to defend them as achieving credible environmental goals, the government is reduced to claiming those costs won't hurt a bit.

Dr. Ergas crunches the numbers and concludes:

For every dollar of revenue this tax raises, it would then ultimately reduce income by four dollars or more

And how will businesses respond?

There is one clear way to do that: cut production - and jobs with it."

Read the whole thing

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