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Carbon tax off, handbrake off, all bets off

Now that the carbon tax has been repealed,  will the cost of electricity, gas and consumer goods drop?

Logically,  prices should fall, if you accept the claims that the carbon tax had such a large impact on those prices.
But,  I predict that household electricity prices will not fall noticeably, if at all, as the roughly 10% reduction is soaked up by continuing increases in network costs and fixed supply charges (such as daily charges).

Industrial electricity users, at least those with very low retail prices,  should see their total bill drop by up to 20%.
As for the cost of consumer goods, the carbon tax was never a significant impost, despite what some commentators have said. We see a lot of manufacturer’s energy bills, and rarely does the cost of energy exceed 5% of the cost of finished products.
So a carbon tax which accounts for 20% of  energy costs (an extreme case, for a customer with very low retail cost component), the carbon tax would be 1% of the cost of the goods.

For most manufacturers, it will be much less. And of course, that’s the ‘Cost of Goods Sold’,  not the actual selling price, which includes fixed overheads (salaries, rent, interest, administrative charges) and profit. So, don’t expect cheaper bread or milk next week,  regardless of what’s been promised.

As for the carbon tax being a ‘handbrake on the economy’,  don’t all other taxes have this effect?

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Geoff is the founder and managing director of Genesis Now, and winner of the 2013 Energy Efficiency Champion award (Energy Efficiency Council).