Introduce a carbon tax to fund spending: The Sims

by AAP | October 6, 2022 07:59 | New

Former competition czar Rod Sims has called for higher taxes on fossil fuels, carbon, minerals and land to fund the services Australians want.

The renowned economist and former chairman of Australia’s Competition and Consumer Commission said the only way to boost the bottom line of the budget and support higher spending was through taxation.

“We have a lot of fiscal space and we need to have a discussion about what spending levels we want,” he told ABC TV.

“If we want higher spending, we can only do it through higher taxation. There is no other way.”

Mr Sims said Australia needed to consider a carbon tax if it was serious about moving to a net zero economy, noting that 70% of revenue already came from income and corporation taxes.

He said offering incentives to spur the uptake of renewable and low-emission technologies such as electric vehicles would only benefit wealthy Australians who could afford them.

“How we hope to achieve our climate change goals without changing relative prices where carbon-intensive activity pays more…I just don’t know,” he said.

But the former ACCC chairman declined to intervene in the debate over stage three income tax cuts, saying that three weeks before the first Labor budget it might be too premature to consider new taxes.

“There’s a fair way to go in this discussion that we probably won’t reach by the October 25 budget, but hopefully the budgets after that,” he said.

Labor Party chairman and former federal treasurer Wayne Swan said the government would be naive not to take international factors into account before the next budget when assessing tax changes.

He said the government had not broken a campaign promise to maintain the tri-state tax cuts, which were due to be introduced in 2024-25, because no decision had been made.

“I don’t know if they’re going to change their minds,” he told Nine’s Today.

“But any government that sat in that environment and said they weren’t going to review all the policy parameters in light of what happened, would be sticking their head in the sand.”

Mr Swan compared the situation to the global financial crisis he faced during his tenure, saying government responses to international factors saved Australia from recession.

There has been speculation that the government is planning to change the statutory stage three tax cuts, which will largely benefit high-income earners, although government ministers have always backed the plan.

Finance Minister Katy Gallagher said on Wednesday the government had not changed its policy, but did not deny a change was being discussed.