Not having a tax is ‘uncertainty’

Cartoon: Gary Varvell

Mark Carnegie is getting his panties in a wad over the possibility of Tony Abbott binning the carbon tax and the pressure he claims this will put on the budget bottom line.  He is claiming that the tax represents a relatively painless way of raising a lot of money fairly quickly.

For a painless method, it has certainly cut a swathe through Labor’s electoral support as well as wreaking havoc in the non mining manufacturing sector which bears the brunt of the higher energy costs, other than favoured sectors that have been ‘compensated’.

In his diatribe though, he raises the point that large foreign owned energy companies ExxonMobil and Shell and BP have all claimed that a carbon tax provides them with ‘certainty’.  BHP Billiton called for one in order to ‘remove uncertainty’ prior to Gillard announcing her intention of breaking her word and introducing one:

MH Carnegie & Co founder Mark Carnegie said there was immense confusion about what Mr Abbott was going to do if he became prime minister, especially with the carbon tax. 

"He is going to turn around and roll back the carbon tax at a time when it is clear that the revenues of the budget are under immense pressure," Mr Carnegie told a business forum in Sydney on Wednesday.  "One of the least painful ways to raise a significant amount of money is with a carbon tax, forget the scare mongering." 

Mr Carnegie said energy giants ExxonMobil and Shell and BP had called for the carbon tax to stay as it would provide planning certainty. 

"The real question is, we know what Tony Abbott said he's going to do but what is he really going to do," Mr Carnegie said.  "That's the big question we've got to work out. 

"He is the person least committed to free market economics of the viable political leaders, of which there are four in Australia."  Mr Carnegie was referring to Julia Gillard, Kevin Rudd, Tony Abbott and Malcolm Turnbull.

Given the tendency of governments to view taxpayers, companies and the economy at large as prey, there is possibly some reason to think that tax is ‘certainty’ but this is a defeatist attitude.  Accepting this to be the case is the same as seeking out any remaining untaxed sections of the economy, (assuming that there are any) and demanding taxes on them to remove ‘uncertainty’.

As for the claim that Abbott is the “the person least committed to free market economics,” this seems somewhat hyperbolic even though Tony, like the others has no real commitment to market based economics.  Gillard and Rudd claim that tax is a market based solution, which trumps Turnbull who has no convictions at all.

Abbott tends to work through kneejerk reactions, which depending on the situation at hand means that there is around a 50% chance that he will come down on the right side.  This is probably better than the alternatives.