The Carbon Tax, How Will It Affect You

This site is politically neutral. We don’t make calls on politics. But if you agree or disagree with the carbon tax, it will affect your home budget. So we have come up with some scenarios of five fictional families and how it will affect their situation. Hopefully one of the family’s scenarios will be similar to your own.

How the carbon tax works in a nutshell. Australia will start taxing the biggest 500 polluting companies a price for each tonne of carbon they emit. Most of these 500 companies will pass this price increase on to us the public. The government expects this price increase will be around a 0.7% increase in spending. For example, if you spend $500 a week on all expenses, now you will have to spend $503.50. A total increase of $3.50 a week. However the government will give some householders some or all of this money as a form of compensation. This will be by a government payment, a tax cut, or both.

Not all families will get a break and have zero compensation for this new tax. It can be quite a complicated exercise to work out how much your family will or won’t get back from the government.

This will all start on July 1^st 2012.

Meet Dave and Judy. They are a single income family with three dependent children. Laura is 3, David is 7 and John is 10. David works and earns $60,000 a year before tax; Judy looks after the children full time.

So the graph below shows the outcome

Total Family Wage $60,000
Government’s Expected Average Cost Of Living Impact Through Higher Prices $540
Increases in Australian Government Payments $332
Gains from tax reform $303

Total Gains $95 in the financial year 2012 to 2013

Lucy is a single parent with one child under 5. She earns $45,000 a year before tax.

Total Family Wage $45,000
Government’s Expected Average Cost Of Living Impact Through Higher Prices $389
Increases in Australian Government Payments $446
Gains from tax reform $1118

Total Gains $1175 in the financial year 2012 to 2013

Matt and Kerry are dual income parents who earn $120,000 between them before tax. For simplicity sake let’s say they earn 50 percent of the wage each. They have two children aged 14 and 17.

Total Family Wage $120,000
Government’s Expected Average Cost Of Living Impact Through Higher Prices $694
Increases in Australian Government Payments $0
Gains from tax reform $606

Total Loss $88 in the financial year 2012 to 2013

Mark and Jen are dual income parents who earn $180,000 between them before tax. For simplicity sake let’s say they earn 50 percent of the wage each. They have two children 15-year-old twins.

Total Family Wage $180,000
Government’s Expected Average Cost Of Living Impact Through Higher Prices $859
Increases in Australian Government Payments $0
Gains from tax reform $6

Total Loss $853 in the financial year 2012 to 2013

Doug is a single pensioner living 100% on the government pension.

Total Family Wage $19,812
Government’s Expected Average Cost Of Living Impact Through Higher Prices $204
Increases in Australian Government Payments $338
Gains from tax reform $0

Total Gains $134 in the financial year 2012 to 2013

Each situation is different for each family. Again, we are not commenting on if it is good or bad. However, it is in your best interests to find out how this tax will affect you.

For more information and a calculator to see what it means for you go to http://www.cleanenergyfuture.gov.au/