World's Economy Continues to Struggle it Has Research Paper

Download this Research Paper in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Research Paper:

world's economy continues to struggle it has become fashionable in some political circles to advocate the adoption of a type of tax described as a carbon tax as a method of minimizing spiraling government costs. Use of the word, "carbon," is somewhat misleading. The broad meaning of the carbon tax term is to define a tax that is designed to not only raise revenue but also change the behavior of a society's consumers (Baumol, 1972). The theory is to raise the cost of a good or service through the imposition of a carbon tax in an effort to offset the negative effects that the good and service causes. The most obvious example is the use of a carbon tax to fight the effects of pollution. The manufacturer who builds its plant next to a river and proceeds to dump its polluting by-products into said river would ordinarily not suffer any additional costs for its polluting activity. Carbon tax advocates, however, would impose a tax on the manufacturer in an attempt to offset these polluting effects.

The Government of Australia has taken the carbon tax idea a step further and actually decided to impose a real carbon tax on polluters that emit carbon into the atmosphere (Packham, 2011). The theory behind this new carbon tax is the same as the traditional one but the Australian Government has decided to impose it against the actual use of carbon. Initially, the Government will tax those who release tax into the atmosphere on a per ton basis with the intent of eventually allowing the market place to determine how the costs will be distributed (Australian Energy Exchange). The goal is to have the manufacturers who cause the pollution to bear the costs of cleaning up the environment from such polluting on a proportional basis.

II. Arguments for Carbon Tax

Carbon is one of the most prevalent and dangerous by-products of the manufacturing process (Union of Concerned Scientists, 2010). Ordinarily, the cost of purchasing manufactured goods does not fully incorporate the collateral environmental costs that are involved in the manufacturing process. The costs that are involved include the mining of the iron ore, the electricity used to operate the factory, and the trucks used to transport the goods to market. Each of these steps involves the release of carbon and other pollutants into the atmosphere that is only partially reflected in the cost of the product. The residual costs have been partially ignored and absorbed largely by society in general. The intent of the new Australian carbon tax is to change this scenario. Carbon pollution has become an increasingly more serious problem and the Australian Government has determined that taxing the goods that are more polluting should be taxed at higher level so as to pass on the polluting costs (Goodall, 2008).

The long-term hope is that the imposition of these taxes on carbon intensive goods or manufacturers will cause a shift in the market place toward consumers beginning to purchase goods that are less carbon intensive (Metcalf, 2009). In theory, these goods should be less expensive and, based on traditional economic theory, the manufacturers using carbon intensive methods should begin changing over their manufacturing process to less polluting methods in an effort to remain competitive in the market.

This move by the Australian Government is, arguably, an enlightened move toward demonstrating environmental leadership. Critics have argued that the enactment of this tax will significantly damage the Australian economy but proponents argue that the costs of carbon pollution on the environment will eventually have to be dealt with and that doing so sooner as opposed to later inures to the benefit of everyone.

III. Economic Impact

The carbon tax will impact on the big polluters most heavily but it can be expected that these costs will be passed onto the consumer. This is traditionally how manufacturers recoup their costs and there is no reason to suspect that this will not be done relative to the carbon tax as well. The Australian Government, however, recognizing the impact that the tax may have on the ordinary citizen, has enacted several provisions to help offset these higher prices by raising the tax free threshold (Onselen, 2011). Plus, in the spirit of the traditional style carbon tax, the Government is optimistic that the imposition of the tax may ultimately manipulate the market so that consumers begin making more environmentally sensitive choices.

One of the more popular arguments used against the enactment of the carbon tax was its potential to have an inflationary effect on the Australian economy (Sydney Morning Herald, 2011). Proponents of this argument point out that adding this tax would cause a substantial rise in the price of manufactured goods and that such rise, without a corresponding rise in income, would be inflationary. The Australian Government, however, argues that this rise in costs will be offset by the changes in the tax law. The Australian Government also argues that the overall effect on most Australian citizens will be minimal. Most prices, they argue, such as food will go unchanged (Herald Sun, 2011).

IV. Impact on Tourism

Tourism is an important element of the Australian economy and there is considerable concern that the carbon tax will have a negative impact on this industry (Australian Bureau of Statistics, 2007). Although travel to Australia enjoys widespread popularity, getting to Australia from the areas that participate most heavily in tourism is not always easy. Australia is largely isolated from the rest of the world and getting there requires either a long plane flight or ocean voyage. Needless to say, either transportation choice requires the use of carbon fuels which translates into the imposition of high carbon taxes (Daily Mail, 2011). Ergo, plane tickets and boarding passes involving travel to Australia suddenly become more expensive. In the travel industry where the profit margins are minimal, such increases can be disastrous.

One of the critics of the proposed carbon tax is Daniel Gschwind, CEO of the Queensland Tourism Industry Council, who is reported to have said in relation to the proposed tax: "An industry like ours relies on the international market, and we are becoming even less competitive. Our products and services are going to become more expensive (Jabour, 2011).

Joining the argument against the carbon tax is the Australian Tourism Export Council (ATEC). The ATEC has published their position that the enactment of a carbon tax will result in the closing of thousands of tourism related businesses and that such closings will cause the loss of tens of thousands of jobs. The managing director of the ATEC argues that the tourism industry is already operating at a marginal level and any further increase in tourism costs could be the final blow to many tourism businesses (Rodriquez, Australian carbon tax threatens closure of thousands of businesses, 2011). Representatives of the Australian Government counter these arguments by pointing out that tourism representatives are misleading consumers with their alarmist claims and that the Government's plan has provisions that will protect the financial interests of the consuming public (AAP, 2011).

V. Conclusion

With any new tax it can expected that there will be strong arguments made by both sides of the issue relative to the pros and cons of the tax. This is particularly true in situations involving new taxes that have such far reaching effects. The carbon tax that is being proposed by an Australian Government that is barely holding on to power has stimulated a great deal of discussion. The move by the Government is admirable in theory but may be poorly timed in relation to the present state of the overall Australian economy, in general, and the state of the tourism business, in particular. Few would deny that carbon levels must be lowered for the long-term benefit of Australia and the…[continue]

Cite This Research Paper:

"World's Economy Continues To Struggle It Has" (2011, September 21) Retrieved October 21, 2016, from

"World's Economy Continues To Struggle It Has" 21 September 2011. Web.21 October. 2016. <>

"World's Economy Continues To Struggle It Has", 21 September 2011, Accessed.21 October. 2016,

Other Documents Pertaining To This Topic

  • Africa the World s Forgotten Stepchild

    World Trade issues are an important issue to the plight of Africa as well. Providing a more level playing field for Africa to get into the game will set the wheels in motion for improvement and allow Africa to begin reaping some of the benefits of the world trade agreements. That money can be funneled back into the development of the continent thereby reducing the need for outside funding. Debt cancellation

  • GDP and the U S Economy

    1 260000 2009 93.7 275000 2010 89.6 290000 2011 91 310000 2012 88 327000 2013 Israel Government Spending Consumer Goods Year 35.1 96000 2009 35.4 103000 2010 44.8 109000 2011 41 111000 2012 39.3 114000 2013 Question 2C With so much conflict continuing around the world, one can assume that government spending may begin to increase. From that perspective, they can then also be assumed that nonresidential fixed investment may also continue to go down. This is based on the qualitative relationship the two variables have with one another. Question 3A & B The last two quarters saw a decrease in nonresidential fixed investments. In fact, the

  • Ecofeminism Attracting the World s Attention

    Women and water in India. In the villages of North Gujarat in India, so much groundwater has been removed that water supplies are now becoming scarce, according to Bhawana Upadhyay, writing in the journal Agriculture and Human Values. Women in North Gujarat are basically looked upon as "…domestic water users while men are seen as productive water users, despite the fact that women make significant use of water for productive

  • United States Still the World s

    Models of Media and Politics A review of media / political models sheds some light on why the United States' cultural themes have been such a dominant dynamic in Europe, among other global venues. In describing the three models of media and politics, Daniel C. Hallin and Paolo Mancini report that the media in Southern Europe (the "Mediterranean" or "Polarized Pluralist Model") is "an institution of the political and literary worlds"

  • AB Inbev Is the World s Largest Maker

    AB InBEV is the world's largest maker of alcoholic beverages and they have other interests (such as bottling for other beverage makers) which increases their overall revenues. Because the company has a business plan which includes operational efficiency, a strong financial matrix, well-trained and knowledgeable employees and a customer-first focus, they have been able to maintain and even gain market share during difficult economic times. With unique strategic capabilities that

  • Qantas Airlines Qantas Is the World s Second

    Qantas Airlines Qantas is the world's second oldest airline. Founded in the Queensland outback in 1920, it is Australia's largest domestic and international airline and is recognized as one of the world's leading long distance carriers, having pioneered services from Australia to North America and Europe. The Qantas Groups today employs approximately 32,500 people and offers services across a network spanning 182 destination sin 44 countries (including those covered by codeshare

  • Toyota Is One of the World s Leading

    Toyota is one of the world's leading automakers. For most of its existence, the company has been unassailable, but this past year has presented the company with a number of challenges. These include plant shutdowns caused by parts shortages as a result of the Japanese tsunami, Japanese consumer spending falling again because of the tsunami, competitive challenges and product quality issues that lead to recalls. As one of the world's leading

Read Full Research Paper
Copyright 2016 . All Rights Reserved