Impact of the carbon tax on households

The impact of the carbon tax on household expenditure is likely to be relatively mild with an increase in inflation of 0.6%. Compared to the recent past, this impact should be easily manageable.

When you delve into the quantitative data on energy and carbon emissions it appears that there is little basis for households to fear carbon pricing. The energy price rises we’re likely to experience are pretty mild for most households and most businesses in comparison to their overall expenditure. And the money raised by government through requiring polluters to pay a carbon tax or purchase carbon permits doesn’t just disappear into the ether. It can be redistributed back to households such that they are no worse off – although some polluting businesses will be less profitable.

Getting a reasonable feel for energy price rises over the next decade is actually a reasonably straightforward calculation that can be demonstrated transparently, without the need for fancy economic models.

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