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Last updated on April 19, 2014 at 5:20 EDT

Australia To Impose New Pollution Tax

July 11, 2011

The Australian government announced a new tax on carbon emissions for the worst polluters in the country, beginning in 2012.

Prime Minister Julia Gillard said the tax would impose a $25 ($23 Australian) per ton penalty on offenders. The economic reform will cover nearly 500 companies, and a market-based trading plan will be announced in 2015.

The move has been sharply criticized by opponents, who expect consumer prices to rise by nearly 11 percent due to the new tax. Critics argue the levy would damage economic competitiveness.

Australia is one of the world’s leading emitters of greenhouse gases per head of population. The country relies on coal for 80 percent of its electricity, and is also a major coal export.

The new tax, which takes effect 1 July 2012, includes any company that produces at least 27,500 tons (25,000 tonnes) of carbon dioxide per year. However, agriculture, forestry and land will be excluded from the tax. Motorists are also exempt from the levy, except for heavy trucking.

“As a nation, we need to put a price on carbon and create a clean energy future,” Gillard told a news conference in Canberra. “Australians want to do the right thing by the environment.”

Gillard made a televised address on Sunday to try to sell the package deal to the nation. She said the biggest polluters will pay a fixed price per ton of CO2 until 2015, when the market-based trading scheme will be introduced.

The government will then set a floor price and an upper limit for at least the first three years to avoid excessive price fluctuations.

Political opponents of the bill, along with the energy industry, have mounted a strong campaign against the tax, with protests in all of Australia’s major cities in March. Opinion polls have also showed nearly 60 percent of voters opposing the policy.

The government hopes to win over those voters by spending some of that tax money raised to compensate households for the higher energy bills. It promises tax cuts for low and middle-income households, as well as increased state pension and welfare payments.

However, households are expected to see consumer prices — including food — rise by an average of 0.7 percent due to the effect of the carbon taxes on the worst emitters.

Gillard’s coalition government has a majority of just one seat in the lower house of parliament. Pasty attempts to get a tax through parliament were defeated.

Opposition leader Tony Abbott promised to wage a political war against the carbon tax. “A one-sided carbon tax, a unilateral carbon tax is an act of economic self-harm,” He told BBC News.

The Australian government’s ultimate goal is to cut 159 million tons of carbon pollution by 2020, reducing emissions by 5 percent below 2000 levels.

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