As we all brace ourselves for the unusual experience of tax cuts being announced today we have been surprised that the media has not picked up on a confession by Government yesterday that the ETS will be a huge revenue spinner for Government. A paper tabled in Parliament by Cullen yesterday suggested that the original proposal would have generated $34 billion by 2030. The revised scheme now on the table will generate $21 billion between 2013 and 2030. Revenue before 2013 will be a relatively modest $500 million a year twice as much as would be raised by the $3 a tonne carbon tax that we are advocating.
These numbers do not include the gain that Government will receive from increased profits in the electricity sector (largely Government owned). These increased SOE profits from the ETS in the first three years would be $160 million a year based on a price of $15 per tonne (we think the price in reality will be at least three times as high).
We have never quite understood how National, a party that says it can't support any new taxes, says it supports an emissions trading regime. A carbon tax would be far more transparent, impact far more certain (Government sets the rate as opposed to inevitable price fluctuations in a carbon permit trading market), and far more easily revenue neutral (what comes in as carbon tax could be offset against general taxation).
