Queensland mining magnate Clive Palmer said that he would launch a legal challenge against the carbon tax before the Australian High Court. The basis of his planned challenge is a legal advice that the tax, slated to take effect July 1, is not constitutional.

"You can't really tax carbon. The other thing about it, of course, is it's a joke. Of course the air moves around right around the world. If you tax something in Australia, those emissions will go offshore, those jobs will go offshore," Mr Palmer told ABC.

Opposition leader Tony Abbott backed Mr Palmer. He pointed out that the Commonwealth cannot tax the states and the carbon tax would be paid by state governments. Mr Abbott has vowed to axe the carbon tax if he would become prime minister.

Mr Palmer denied the legal challenge, which he threatened to file in 2011, was in response to Treasurer Wayne Swan's essay that charged him and two other Australian mining magnates that they are using their wealth to influence public opinion on key issues such as the mining tax and carbon tax.

The billionaire admitted that he based his plan to go to High Court, which he stressed is the right of any Australian, on advice of his lawyers. Mr Palmer also denied that he is using the challenge to get back at Mr Swan for his hard-hitting essay. However, he did not resist hitting back at the treasurer.

"I've given away each year more than a hundred times the treasurer's salary to Australians who are needy. I wonder how much of his salary he has given away to Australians who need that wealth," Mr Palmer asked.

Liberal National Party leader Campbell Newman also supported Mr Palmer's planned legal challenge against the carbon tax. He said the carbon tax is bad for Queensland and jobs in the mining state. Mr Newman, who is running for the premiership in Queensland, said the state election should serve as a referendum to pick residents' perceptions on the carbon tax.

Business groups are pushing to bring down the carbon price to $10 per tonne, but the federal government insisted on the initial $23 per tonne carbon price despite reports that the carbon tax would hit the Australian economy by $30 billion.

Small businesses also oppose the carbon tax because of the extra cost to their annual rent, power and landlord costs. Shopping centre giant Westfield is passing on the carbon cost to tenants by including a Carbon or Greenhouse Gas Emission Charge clause on its lease agreements with 11,885 retailers across the country. Other shopping centre owners are reportedly following suit.

A business owner with outlets across Victoria, Queensland, South Australia and New South Wales estimates the carbon tax would increase his annual cost by $250,000, including $100,000 on rent. Other business owners warned that the added expenses would be passed on to consumers in the form of higher prices for goods and services.

This, in turn, would exacerbate the shrinking retail pie in Australia as consumers respond negatively to the price increases by holding back on purchases.

Climate Change Minister Greg Combet debunks the unconstitutional claim of Mr Palmer.

"The legislation relies on a number of powers under the constitution.... I think this is another foray by Mr Palmer who's got more money than sense really," Mr Combet told Sky News.

"He seems to be exercising all of the wealth that he's acquired out of the resources boom and elsewhere just to pay lawyers," he added.

Greens leader Bob Brown belittled Mr Palmer's planned legal challenge.

"The court will deal with it appropriately and it'll spread his wealth a little more," Mr Brown said.

RELATED STORIES