Utilize the models of marginal benefit and marginal cost, and taxes to explain the carbon price

described in this article. Clearly explain the likely impacts on prices and quantities of goods and
services in Australia and ensure include a discussion whether or not this is a ‘tax on business’.

The discussion surrounding carbon price mechanism has been on the rise since a few years. Many
environmentalists consider carbon pricing an essential mechanism for reducing the impact of carbon in
the environment. Measures of carbon pricing are getting increasingly more acknowledged due to
increasing awareness about environmental problems of the globe. The impact of Greenhouse gas
emissions on the environment is damaging in general. The rationale behind imposing pricing structures
on carbon emissions is encouraging accountability of business from an environmental perspective. The
affectees of environmental pollution are usually the humans and animals surviving in the areas.
Whereas industrial establishments have stayed away from bearing the brunt of their actions. The
premise of carbon promising relies with limiting the allowed emissions of these industrial activities.
Industries are required to pay a price for their carbon footprint through the carbon pricing structures.

As mentioned in the article the Australian government is proposing to impose a 75 $ ton carbon cap for
industries in an effort to ensure responsibility towards the environment. The taxation imposed on the
industries would have a great impact on the goods produced in those industries. The Australian
government remarks the imposition of the tax inevitable due to global environmental standards. De
carbonization compliances are important from a global perspective. If Australia did not impose a carbon
pricing themselves, then they would be subjected to foreign taxes of de carbonization which could be
more problematic for the Australian economy. In 2012, the government had proposed a 23$ per ton
carbon price which was unanimously rejected by Industrial segments of the society. As noted, the newly
implemented tax is three times greater than the one observed in the regime of coalition government. It
is important to note that the impact of these imposed taxations would be translated to the households
and end consumers. In order to maintain a sustainable business, Industries and their products would be
sold at higher prices in an effort to leverage the rising costs. However, the question arises, how much
the customers would be willing to pay for the newly taxed commodities. The fairness of these taxes and
the transferred impact on the end consumers is debatable. Since the carbon pricing structures promote
a shared burden of environmental damage for both the industries and customers living in the
environment alike. The customers who are a part of the environment are already bearing the damage of
environmental issues such as pollution, depleted health and general loss of natural resources.
Therefore, the imposition of new taxes which whose impact eventually translates on the customers is
not plausible. The implemented tax aims to serve the industrial segments with required barriers and
limitations in polluting the environment through gas emissions. If businesses keep adjusting the prices of
their products to adjust the taxation expense, the core purpose of making the business accountable
would not be achieved. The consequential increment in prices would be recovered from the customers.
Eventually the problem would remain the same.

According to the models of marginal benefit, a customer can increase their limits of purchasing power to
a certain level. The concept of marginal benefit discusses the flexibility of customers in paying extra
money to buy a product. However, the flexibility is also subject to factors like analyzed value and
perception for the product. Once the consumption of the product increases, the marginal benefit
experiences decline. Since the product does not define as a premium segment product for daily usage,
the extra price a customer is willing to pay gets compromised. As indicated, the impact of these taxes is
supposed to hit the household segment the most. Household products have a high usage and the
frequency of their purchase is often higher than those of luxury items. Therefore, repetitive purchases
somehow reduce the value of product from the perspective of preimumness. As a result, customers
would not increase their spending limits for compensation of the taxes the government has levied on
the businesses.

Concluding, the following tax has been formalized to promote environmentally responsible business.
The carbon price would help businesses to limit the damage they give to the environment. Australian
government is approaching a target of cutting their gas emissions completely by the year 2030, the
implementation of carbon pricing would help businesses to chase the target of reducing their gas
emissions by 4.9 % each year. The impact of his carbon pricing structure might be gradual, but
eventually it would help businesses to support the Government in pursuing green principle of
production. Government has imposed emission guidelines for the industries, however a cooperation
amongst consumers and business is important for the fulfillment of government’s objectives. Businesses
should be implementing green practices while consumers should also engage with environmentally
conscious businesses and support them by paying a little extra for their products.