TRYING to shoehorn agriculture into an emissions trading scheme promises to be complicated and rife with “perverse outcomes”. How about a consumption tax instead?
Paul Toni of the World Wide Fund for Nature (WWF) flagged the idea of an additional tax delivered along the same lines as the GST during his presentation at the recent Australian Farm Institute conference on emissions trading.
In an earlier submission to the Australian Future Tax System Review, chaired by Dr Ken Henry, Mr Toni outlined an “environmentally-weighted GST”.
It attempts to discourage wasteful consumption, while at the same time returning funds to environmental and sustainable agriculture programs.
The submission quoted the Australia Institute figures that estimate Australians each year throw away about three million tonnes of food valued at about $5.3 billion a year.
“Throwing away a kilo of beef wastes the 50,000 litres of water which was consumed in its production, and 51.7 kilograms of greenhouse gas emissions emitted,” the paper said.
(Figures from the United States on beef’s water footprint range from 18,000 litres to 100,000 litres.)
“Throwing away a pair of jeans wastes 10,850 litres of water. Throwing away one kilogram of building concrete wastes the 170 megajoules of energy used to produce it.”
To discourage ongoing waste, WWF proposed a form of GST “weighted to encourage the consumption of sustainable commodities and discourage wasteful and excessive consumption, particularly of high-environmental impact commodities”.
“…all money raised (less the costs of administration and enforcement) should be applied to repair and support Australia’s biodiversity, water resources, vegetation and soils and sustainable agricultural systems.”
The paper suggested that the tax be applied on commodities and services across three bands according to whether the product is rated as having a high, medium or low environmental impact.
“Environmental impact” would be assessed on how the product rated on energy use, water use and land disturbance relative to the economy-wide average for all economic sectors.
Should the CPRS concept fail to survive the Parliamentary process, WWF argued that greenhouse gas emissions could also be included in the weighting.
A suggested methodology for applying weightings is that used by the University of Sydney/CSIRO 2005 analysis “Balancing Act – A Triple Bottom Line Analysis of the Australian Economy”, found at However, the consumption tax proposal delivers little relief for ruminant livestock sectors unhappy with the financial toll that methane gas accounting would take under the CPRS.
Using the “Balancing Act” metrics, the beef sector would be rated against 135 other industry sectors as having 18 times the water use, 58 times higher land disturbance and 26 times more greenhouse gases.
“As a result beef cattle would be considered a very high environmental impact activity and be taxed at the highest rate.”
The “poultry and eggs” category, on the other hand, is considered to involve only twice the average water use, three times the land disturbance and twice the average greenhouse gases.
It would be taxed at the lowest rate.
“It should be noted that there are significant opportunities to design beef production systems with lower environmental impact and such measures would be an appropriate use of a proportion of the funds raised through the environmentally-weighted GST,” the paper said.
Analysis cited in the submission indicates that a consumption tax would have the greatest impact on more affluent Australians, who are also the most wasteful.
The submission concluded that the suggested tax would deliver a price signal discouraging overconsumption of environmentally-damaging products, encouraging producers and manufacturers toward forms of production with a lower environmental impact.
“It would also provide a reliable and transparent source of funding with which to correct the market-failure created by the lack of a financial incentive for ecosystem services…,” the paper said.
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