Achieving Environmental Sustainability through Fiscal Policy
Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Julsuchada Sirisom, Hope Ashiabor and Janet E. Milne
Chapter 14: Australia’s Proposals to Tax Coal Super Profits: A Cautionary Tale for the Environment
JOBNAME: Kreiser IX PAGE: 1 SESS: 47 OUTPUT: Wed Aug 24 14:42:29 2011 14. Australia’s proposals to tax coal super proﬁts: a cautionary tale for the environment Bill Butcher INTRODUCTION Coal is a vital resource, producing 27 per cent of the world’s energy and 42 per cent of global electricity.1 For Australia, it is especially critical, given that it produces 76 per cent of Australia’s electricity and is a vital major export commodity.2 As is well known, these beneﬁts do not come without a cost, the great disadvantage being the damage the consumption of coal causes to the global environment, particularly in the generation of electricity. Coal accounts for up to 37 per cent of Australia’s greenhouse gas emissions,3 and about 20 per cent of global emissions.4 This chapter examines the treatment of coal under the Australian taxation system. It considers the current regime for taxing the extraction and sale of coal, examines recent proposals for major reform of mineral tax policy, and concludes with observations on the place of green issues and imperatives within that regime. THE CURRENT AUSTRALIAN SYSTEM Any discussion of coal taxation must start with the understanding that minerals in the ground belong to the state, which may grant, through licensing or some other means, the right to extract and sell those minerals. Naturally, the entity to which that right is granted must pay for it, usually in addition to the normal income tax imposed on any proﬁts generated through...
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