Carbon Tax package finally unveiled

What is the truth concerning Gillard Labor's carbon tax? How will it really be implemented? Who will it affect and how? Can it succeed in restructuring the economy? Does it involve elements of economic redistribution; and if it does, is that necessarily a bad thing?

The Gillard government's carbon tax will provide "tax cuts for those on incomes under $80,000" leaving "6 million households better off or fully compensated."

Peter Martin has noted how "for more modest earners, the benefits are large: $626 a year for a single earner on $20,000; $1226 for a dual-income couple with two children on $75,000."

A restructuring of the tax system will provide for some of this compensation. For instance, the tax-free threshold will be "more than trebled to $18,200," and individual pensioners will receive compensation of up to $338 a year; with up to $510 for couples.

Furthermore, $9.2 billion will be provided in the form of business compensation over a three year period, aimed largely at trade-exposed industries

But "more than three million households," those with the highest incomes, will lose out to some degree. Some will only be partly compensated. Around "one in ten" – the wealthiest of all - will receive nothing.

The most intensely affected areas of the economy will be energy generation and distribution.

Again, Peter Martin has noted how "from mid-next year, the price of electricity will rise a further 10 per cent as a result of the carbon tax and the price of gas a further 9 per cent."

But, "the price of food is expected scarcely to move, advancing less than one-half of 1 per cent."

The response from the Conservative side of politics was predictable. Tony Abbott argued: "[This is] socialism masquerading as environmentalism… This is redistribution pretending to be compensation. It's a tax increase pretending to be an environmental policy."

Herald-Sun reporter Steve Lewis seemed to be echoing Abbott, by referring to tax cuts for struggling lower-income workers as a "classic 'soak the rich' Labor program."

In assessing the government's policy it is best to respond to the claims of critics directly.