Q: What’s the difference?
A: A carbon tax is a fixed price scheme where about 500 companies that emit the most greenhouse gases are charged the tax – excluding businesses in the agriculture sector and in most of the transport sector. Under this scheme there is no limit on the amount of pollution. An emissions trading scheme is where the government sets a cap on the total amount of pollution that can be released each year. Businesses compete for permits and can trade permits, within that cap. The price can vary but the amount of pollution is fixed. Each year the Government could lower the cap – meaning Australia’s emisisons will fall.

Q: Who pays the carbon tax?
A: The government says only the 500 companies with the biggest carbon pollution emissions will pay. That’s companies such as Macquarie Generation Australia and Bluescope Steel.

Q: How much money will that raise?
A: About $24.5 billion over three years.

Q: Where does that money go?
A: About $15.3 billion will be given back to workers as tax cuts, household energy efficiency measures and welfare payments. The rest of the money will be used to support jobs and help industry transition, and on other green programs.

Q: When will I get my tax cut or pension rise?
A: Changes to the tax system begin on July 1, 2012. Payments to pensioners, people with family payments, or welfare recipients – called clean energy supplements – will be provided between May and June, 2012.

Q: Do I pay carbon tax at the supermarket check out?
A: Not directly. Unlike the GST which appears on the shopping docket and is paid by consumers, the carbon tax is paid only by the top 500 companies with the biggest carbon pollution emissions. But those big companies will pass the cost of the tax onto their customers.

Q: Will that cause a blow out in the cost of living?
A: Treasury estimates prices across the whole economy will only rise by 0.7 per cent, much less than under the GST. On average, households will pay $9.90 a week more.

Q: Won’t it make electricity more expensive?
A: Yes. Average household power bill go up by 10 per cent in 2012-13 and gas will go up 9 per cent. That will increase further in future years. But the government says nine out of 10 households will get compensation to soften the blow and 4 million people will actually be better off.

Q: If people are better off, what’s the point?
A: That’s what many critics say. The Government insists it doesn’t want to hurt low-income people and families but is trying to encourage big business to use more renewable and low-emission energy alternatives to the cheaper and dirtier energy sources such as coal. It says if households switch to green energy alternatives they can pocket the savings.

Q: Will this kill the coal industry?
A: Again, that what many critics fear, but the one thing the Greens and the coal industry seem to agree on is that the coal industry will continue to grow in the next decade. Coal miners say the carbon tax will restrict that growth, but the government has a $1.3 billion package to transition the coal industry to a ‘cleaner’ future.

Q: Will it cost more to drive to work?
A: Petrol is not included in the scheme. But domestic airfares will go up because domestic aviation fuel excise will be included.

Q: How much pollution will be cut by the carbon tax.
A: About 159 million tonnes of pollution will be cut from our atmosphere by 2020 – the equivalent of getting 45 million cars off the road.

Q: What effect will that have on stopping the predicted rise in temperatures?
A: With international action, this could help limit temperature increases at less than 2C above pre-industrial levels.

Q: Will Australia doing this make a difference?
A: The Government says Australia has the highest emissions per capita, even though it only represents 1.5 per cent of global greenhouse gas emissions. It says Australia has much to lose from global warming so it should start to cut emissions early.