As promised, the carbon tax has been repealed by the Australian government, which is expected to decrease costs for Australian businesses.
A number of bills were put before the senate as part of the repeal of the Carbon Pricing Mechanism and the legislation was given Royal assent on July 17 2014. The removal of the Carbon Pricing Mechanism came into effect as of July 1 2014.
The Department of the Environment states that it is expected that the repeal of the carbon tax and the Clean Energy Package will impact on individuals and businesses by decreasing the cost of living by $550 than if the tax had not been removed and reducing retail gas and electricity rates by around 7 per cent and 9 per cent respectively. An estimated 370 liable entities will also save nearly $90 million a year on annual compliance costs.
What the changes mean for businesses
The Department of the Environment explained that approximately 75,000 businesses were directly affected by the carbon tax. It also outlines that the increase in duties and rebates, such as aviation fuel duty was often passed on to smaller businesses, customers and households in the form of higher prices.
To ensure the price reductions due to the repeal pass onto consumers the Australian Competition and Consumer Commission (ACCC) will regulate key industries in Australia, in particular the synthetic greenhouse gas, electricity and gas sectors. The ACCC will monitor the prices, costs and profits of these industries.
A July 17 joint press release from the Prime Minister Tony Abbot and the Minister for the Environment Greg Hunt stated that due to the changes the ACCC has been provided funding and "strong price monitoring powers" to ensure the savings reach businesses and consumers.
New powers have been granted to the ACCC for one year following the repeal of the carbon tax. The new powers include the ability to take action against companies or organisations that do not pass on the savings to consumers or that make misleading or false claims regarding the effect of the repeal on prices. These powers are complementary to Australian Consumer Law.
Monetary penalties of up to $1.1 million can be given to corporations and individuals can be charged with a penalty of up to $220,000.
To talk about how the changes will affect any current commercial contracts or agreements talk to a commercial lawyer.