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Tax on carbon tax?

With the carbon tax recently in place, there has been much speculation in regard to the goods and service tax (GST) to be charged on top of the carbon tax which could further inflate the cost of the carbon tax. This form of embedded tax may cause inefficiencies in the economy.

It has been confirmed by NSW electricity companies that the 10 per cent GST would be applied to power bills after the implementation of the carbon tax, with Origin Energy mentioning this as normal practice as the carbon tax cost is added to cost of supply.

However the Federal Government has insisted that GST does not apply to the newly implemented $23 per tonne charge of the carbon tax. It seems an accurate effect of the carbon tax is yet to be reflected with it being implemented for a mere two weeks.

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