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Report: Australian carbon tax contributes to record number of businesses insolvencies

As U.S. lawmakers debate imposing a tax on carbon dioxide emissions, evidence is emerging that Australia’s carbon tax has hit businesses hard.

News Limited Network reported the country’s carbon tax was contributing to a record number of firms facing insolvency. Data from the Australian Securities and Investments Commission showed that a record 10,632 businesses faced insolvency for the 12 months to December 31 2012 — up from 10,481 for 2011.

Australia’s largest manufacturing firms asked the central government to scrap the nation’s carbon tax as it disadvantages local companies that are attempting to compete on a global market.

Critics argue that the carbon tax is putting Australian businesses at a disadvantage and will lead to job losses.

“In the absence of similar schemes by major trading partners, Australia’s carbon tax places tremendous pressure on Australian manufacturers and inevitably leads to job losses and business closures,” said the group Manufacturing Australia.

Origin Energy managing director Grant King said that the carbon tax as well as other green programs made up as much as 30 percent of small and medium sized businesses’ electric bills.

“No wonder (companies) are saying it is hurting us,” said King.

Australia has been taxing carbon emissions since July 1 of last year at a rate of $23AUD per ton. The system will become a full-blown cap-and-trade scheme in three years and will be integrated with the European cap-and-trade system.

Australia’s tourism industry has also been impacted by carbon pricing. A study commissioned by Tourism Accommodation Australia says the carbon tax will add $115 million in costs to hotels and motels.

“The additional costs imposed on hotels from the carbon tax are coming straight off the bottom line,” said Rodger Powell, TAA managing director.

However, the Australian government defended the carbon tax, saying that the effects on businesses and consumers would be modest.

“The Federal Government has always been up front that there would be a modest impact on the accommodation industry, such as small electricity price increases flowing through the economy under carbon pricing,” said a spokesman for Australian Climate Change Minister Greg Combet.

Minister Combet also said that the government was “acutely conscious of the pressures on parts of Australian manufacturing which are due to the high value of the dollar and intense competition on world markets.”

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