Australian Firms to Pass 43% of Carbon Tax Cost to Consumers

Research by carbon analytics firm RepuTex shows that the proposed carbon tax will cost the Standard & Poor's ASX 200 firms $18.7 billion in the decade 2013 through 2022.

But Australian firms will pass on to consumers 43 per cent of the carbon tax cost, or $14.6 billion of the expected $33.4 billion cumulative direct and indirect carbon costs. The remaining $18.7 billion is expected to be shouldered by the S&P ASX 200 companies.

The computation is based on carbon prices of $23 per tonne beginning July 1, 2012, which would go up 2.5 per cent to 2015 and remain flat at $29 until 2022.

Although all Australian companies would be exposed to an indirect cost from the purchase of electricity and supply chain inputs, which would cost about 43 per cent of the total S&P ASX 200 carbon cost, medium- and small-scale capitalised materials and industrials companies would be the hardest hit.

"Small to mid cap companies will be in the firing line due to their lower levels of revenue and lower flexibility to absorb costs. These companies, particularly if they are less diversified and engaged in carbon intensive activities, are likely to face more immediate competitive challenges during the transition period, even in spite of government assistance or their own cost transfer," RepuTex Associate Director of Research Prayank Katiyar said in a statement.

Before carbon tax approval, some companies have tried to use it as a pretext to hike prices.

Australian Competition and Consumer Commission Chairman Rod Sims disclosed that the commission recently received a complaint against a liquor store that placed a price tag of $60 for a carton of beer. A carton normally costs $49.95.

When the shopper asked the cashier why was the beer priced higher, the cashier said the increase was due to the carbon tax. Sims said the store was sent a written warning.

Enterprises caught by carbon cops deployed by the ACCC could be fined up to $1.1 million for hiking their prices on account of the controversial tax, which has yet to be approved by Australia's Parliament.

"Businesses have the right to increase their prices at any time. But claiming an increase is to one extent or another the result of carbon pricing, when it is not, is misleading," Sims told the Herald Sun.