PROJECTS

Effect of Carbon Tax on Small and Medium Enterprises in Australia

The problem

The Australian government proposed a tax on carbon dioxide emissions, as a precursor to an emissions trading scheme, but its major trading partners and competitors did not price carbon. While the Government thought that only large emitters—which would be taxed directly—would be affected by the tax, small and medium enterprises (SMEs) would have faced indirect effects.

How we helped

Castalia estimated the indirect effects of the proposed carbon tax on manufacturing SMEs for the Australian Chamber of Commerce and Industry.  We constructed a financial model for a representative firm in each sector, after surveying a sample of companies in the chemical and metals sectors that either export their products or compete with imports. Due to international trade, prices for the output of these businesses would remain unchanged after the tax, but their costs would go up. We assessed the effects of the carbon tax on the costs of inputs, and the effects of higher costs on the SMEs where they could not be passed to consumers. We concluded that the carbon tax would reduce the profitability of trade-exposed SMEs by up to a third, with the consequential effects on investment and employment.

Impact

The Australian Chamber of Commerce and Industry used our findings to strengthen their argument that the proposed carbon tax would affect trade-exposed SMEs and would simply result in leakage of emissions from Australia to other countries. This evidence added to the broad opposition from across all sectors of the economy. The government eventually decided not to proceed with the carbon tax.

Our team

Alex Sundakov

Alex Sundakov

Executive Director
Peter Hoogland

Peter Hoogland

Director

How can we help you?

How can we help you?

WASHINGTON, DC
+1 (202) 466-6790
1747 Pennsylvania Avenue NW, Suite 1200
United States of America

SYDNEY
+61 (2) 9231 6862
Suite 19.01, Level 19, 227 Elizabeth Street
Australia

AUCKLAND
+64 (4) 913 2800
74D France Street, Newton South
New Zealand

WELLINGTON
+64 (4) 913 2800
Level 2, 88 The Terrace
New Zealand

PARIS
+33 (0)1 84 60 02 00
64-66 Rue des Archives
France

BOGOTÁ
+57 (1) 508 5794
Calle 81 #11-08, Piso 5, Oficina 5-127
Colombia

Thinking for a better world.

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WASHINGTON, DC
+1 (202) 466-6790
1747 Pennsylvania Avenue NW, Suite 1200
United States of America

SYDNEY
+61 (2) 9231 6862
Suite 19.01, Level 19, 227 Elizabeth Street
Australia

AUCKLAND
+64 (4) 913 2800
74D France Street, Newton South
New Zealand

WELLINGTON
+64 (4) 913 2800
Level 2, 88 The Terrace
New Zealand

PARIS
+33 (1) 73 44 26 97
6 Rue Duret
France

BOGOTÁ
+57 (1) 508 5794
Calle 81 #11-08, Piso 5, Oficina 5-127
Colombia

Thinking for a better world.

Castalia-logo-negative-2col
PROJECTS        NEWS        BLOG        CONTACT
© Copyright 2019 Castalia. All rights reserved.
Terms | Privacy | Credits | Sitemap