Carbon. Consider yourself, taxed.

Welcome to what the media have dubbed “Carbon Sunday.” Today is the first day of the Gillard Government’s price on pollution.

This is the policy issue that has brought on a vicious campaign from the Opposition and seen a Government’s popularity plummet in the opinion polls. It is an issue that has divided a nation.

Tony Abbott and the Liberal Party, who promise to get rid of the carbon tax if elected to Government, have today launched a major advertising campaign against the tax and the Prime Minister.

If you’re not in the mood for any carbon chatter today, then do not touch the remote control, do not browse the news websites, do not buy a newspaper and do not turn on the radio. Because with both sides out there making their case to the Australian people – media coverage today will be at election campaign saturation levels.

No matter where you stand on pricing carbon, we can all agree that no debate is worth having without the facts on the table.

So we’ve revived our carbon tax cheat sheet just for the occasion.

What is a carbon tax?

This is the crux of it. There is a price on carbon of $23 per tonne, which will be charged on some of the biggest 500 polluters in the country. This price per tonne of carbon dioxide released into the atmosphere will increase by 2.5 per cent each year until the carbon tax becomes an emissions trading scheme on July 1, 2015. What this basically means is that for now, the Government sets a price on pollution. In three years, the market will decide what that price is worth and the Government will simply set a cap on how much pollution our economy is allowed to create.

What’s the aim here?

The carbon tax is supposed to – and only time will tell – cut emissions by 5 per cent by 2020 and by 20 per cent in 2050. It is hoped this will be achieved by the cost incentives to big industry, forcing them to get creative in ways to reduce their impact on emissions released in to the air. These targets are modest. Some would call them pretty small and weak. Many have called them ‘an important first step’ in transitioning to a low carbon economy. Basically, it’s not much but it’s a start.

The scheme will apparently reduce carbon emissions in the air by about 159 million tonnes by 2020. That’s the equivalent of taking 45 million cars off the road, the Government says..

So will everybody be paying a lot more money now?

According to Treasury modelling – not really. The average household costs rise will be about $9.90 per week according to the Government but the average compensation directed back to those households in the form of tax cuts and other benefits will be worth $10.10. That means households will, on average, be 20 cents better off per week than before the carbon tax started. The Prime Minister says more than 50 per cent of the money raised from the tax will go back to households in the form of compensation.

What kind of compensation are we getting?

About $15 billion in tax cuts for low and middle income earners.

Let’s list:

The tax free threshold will be tripled to $18,200 in 2012.

1.7% increase to the pension and family assistance benefits and payments.

• Up to $110 per child for a family that receives Family Tax Benefit Part A.
• Up to $69 extra for families that receive Family Tax Benefit Part B.
• Up to $218 extra per year for single income support recipients and $390 per year for couples combined for people on allowances.
• Up to $234 per year for single parents in addition to the increased family payments they receive.

Tax cuts for workers earning up to $80,000 a year worth up to $300.

$300 annual low income supplement.

Some 8 million households are receiving  some form of assistance and for 6 million this will mean they are able to meet cost rises. Another 4 million will be better off. So that’s 9 out of 10 homes that will get some assistance.

The Government has made this assistance calculator available so you can test your own carbon tax exposure, or lack thereof.

What does the tax cover?

The tax covers about 60 per cent of polluting industries but will not cover agriculture or petrol/light on road vehicles. Farmers won’t have to pay it, but they will receive incentives for every tonne of carbon they save from entering the atmosphere.

What help is there for industry?

About $9.2 billion is being made available to ‘emissions intensive, trade exposed’ industries such as coal and steel to help them make changes with out losing their competitive advantage.

A $10 billion Clean Energy Finance Corporation to fund new clean energy technology has also been set up.

What do you think of the carbon tax? Are you in favour of the Gillard Government’s scheme or would you have preferred a different course of action? Are you concerned about how your household will be effected by the tax? Do you think the compensation package is sufficient?