Taxes as punishment don't work

Tax as punishment?

I wonder if the government will listen as intently to the Productivity Commission now as it did when the Commission was providing support for the carbon price:

THE Productivity Commission chairman, Gary Banks, has sounded a warning to the government against using the tax system to change community behaviour in areas such as gambling, road congestion and carbon pollution.

Speaking at the end of the first day of the tax forum in Canberra yesterday, Mr Banks warned that raising taxes to change behaviour had to be done in “the right way to the right extent”.

“That is very hard,” Mr Banks told the forum. He argued that much of the detail on how to change behaviour with taxes was “unresolved” and risked authorities’ ability to convince the community that the taxes were worthwhile.

On carbon pricing, Mr Banks said “the complexities are unbounded” and a key challenge for the government would be reviewing which of the 200 other climate schemes around Australia “deserve to stay and which of those deserve to go”.

His comments echo the Productivity Commission’s findings that state climate change schemes such as solar feed-in tariffs were greatly increasing the cost of carbon emissions abatement.

Taxes really don’t change people’s behaviour – people will just use more of their disposable income to maintain the status quo.

Read it here.


  1. This was always just a veiled way for governments to make copious amounts of money from people’s bad habits.

    • Alcohol, tobacco, and gambling…well, they are all optional, if you do none of them, you dont pay the tax. Using this generalisation (and I do realises that it is one), the CO2 tax implies that we all have “bad habits” just for living in Australia, and that energy consumption is a bad thing. I tend to disagree, I like using energy to make my life better, and longer than it otherwise would be.

      Best I get myself to my nearest 12 step programme to get clean, and kick the dirty mains electricity habit, perhaps the Greens will pay for my rehab?

  2. I mis-read the title, and thought it said “Texas as punishment don’t work”…and then wondered what that was supposed to mean.

  3. SOYLENT GREEN says:

    Most of us–well,many more than before Obama–don’t have “disposable income.”
    I can’t even see status quo in my rear view mirror.

  4. Green / Eco / Pigovian / Pollution / Clean Energy / Environmental / Carbon taxes … call them what you like, are all designed with one purpose in mind … to hurt. Every power point in Australia will soon become a tax collector for the government.

    Taxes collected will go to fund ridiculously expensive ‘green jobs’ – invest in ridiculously fairy tailed renewable energies – provide a market for ridiculously unnecessary carbon credits in an effort to solve a ridiculously stupid problem … imposed by a ridiculously inept government.

  5. Confusious says:

    Pretty cool and wet everywhere in Australia from the East coast to the West coast. Wonder what Brown Gillard’s Climate Fluffer Flannery has to say about all that. And what about Garnaut…. Seems to be also quite still. Maybe the [snip] is coming to haunt him. Finally.

  6. Uhavitbad says:

    “On carbon pricing”
    “That is very hard,”

  7. not seen taxes reduce smoking and boozing. and denmark has a fat tax, which the govnt is drooling about…

  8. Mervyn Sullivan says:

    Leading up to the 2007 election, I often warned people that having a Labor government would inevitably mean having budget deficits, growing Federal debt and more new taxes. In 2011, this is what our Labor government is doing!

    Looking back, between Hawke and Keating, they ran budget deficits, borrowed heaps and introduced a string of taxes e.g. capital gains tax… fringe benefits tax… prescribed payments tax… tax on superannuation (in and out)… sales tax was increased… oh, and lets not forget HECS for students. Despite all this extra revenue, Hawke and Keating still could never balance their budgets.

    I guess we should be thankful that the Gillard government has not yet introduced an “Inheritance Tax” on the pretext that ‘Australia needs to be brought into line with places like the UK’.

    What is it with Labor governments? Why can’t a Labor effectively manage the country’s finances by ‘living within its means’?

    And why is sod all being done about the estimated $27 billion dollars wasted each year on duplication of costs as a consequence of the tiers of government?

    Imagine if the government appointed a professional accountant to head Treasury … what a difference it would make!

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