2.2 Tax expenditures (continued)
I. Carbon Pricing Mechanism
The externalities benchmark deals with taxes (or other revenue raising arrangements) that are imposed to ensure that the private costs of certain activities align with the social costs of those activities.
Tax expenditures reported under this benchmark have a different purpose to the taxation of income or consumption, although they may involve changes to income or consumption behaviours.
This benchmark is only applicable to the carbon pricing mechanism (CPM).
The carbon pricing benchmark comprises:
- a rate set by the value of the Australian carbon units in each year, including the fixed prices applying in years 201213 and 201314;
- a base consisting of full coverage of the emissions covered by the Kyoto Protocol to the United Nations Framework Convention on Climate Change by entities in Australia, with the exception of emissions from liquid fuels and gaseous fuels used for transport. These fuels generally already face other taxation that significantly exceeds tax under the carbon pricing benchmark; and
- the financial year as the period for liability.
| 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 |
|---|---|---|---|---|---|---|---|
| - | - | - | 1,140 | 1,210 | - | - | - |
| Tax expenditure type: | Exemption | 2012 TES code: | I1 | ||||
| Estimate Reliability: | Medium — Low | ||||||
| Commencement date: | 1 July 2012 | Expiry date: | 30 June 2014 | ||||
| Legislative reference: | Clean Energy Act 2011 | ||||||
Emissions from deforestation will be excluded from the carbon pricing mechanism (CPM). However, the Carbon Farming Initiative creates economic incentives for land managers to reduce carbon emissions and store carbon in the landscape by allowing them to generate carbon credits.
The tax expenditure falls to zero for the 2014‑15 year onwards, consistent with the revised CPM benchmark applying from 1 July 2014.
| 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 |
|---|---|---|---|---|---|---|---|
| - | - | - | 100 | 120 | - | - | - |
| Tax expenditure type: | Exemption | 2012 TES code: | I2 | ||||
| Estimate Reliability: | Low | ||||||
| Commencement date: | 1 July 2012 | Expiry date: | 30 June 2013 | ||||
| Legislative reference: | Clean Energy Act 2011 | ||||||
In most covered sectors under the CPM, only entities producing above 25,000 tonnes of emissions per year are liable. This is largely for practical reasons — participation thresholds are designed to balance the benefits of increased CPM coverage against the costs of scheme compliance.
The tax expenditure falls to zero for the 2014‑15 year onwards, consistent with the revised CPM benchmark applying from 1 July 2014.
| 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 |
|---|---|---|---|---|---|---|---|
| - | - | - | 180 | 170 | - | - | - |
| Tax expenditure type: | Exemption | 2012 TES code: | I3 | ||||
| Estimate Reliability: | Low | ||||||
| Commencement date: | 1 July 2012 | Expiry date: | 30 June 2013 | ||||
| Legislative reference: | Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 | ||||||
Emissions from Kyoto protocol synthetic greenhouses gases imported or produced prior to the start of the CPM on 1 July 2012 will not incur a liability.
The tax expenditure falls to zero for the 2014‑15 year onwards, consistent with the revised CPM benchmark applying from 1 July 2014.
| 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 |
|---|---|---|---|---|---|---|---|
| - | - | - | 240 | 220 | - | - | - |
| Tax expenditure type: | Exemption | 2012 TES code: | I4 | ||||
| Estimate Reliability: | Medium — Low | ||||||
| Commencement date: | 1 July 2012 | Expiry date: | 30 June 2014 | ||||
| Legislative reference: | Clean Energy Act 2011 | ||||||
Emissions from waste deposited at landfills prior to the start of the CPM on 1 July 2012, known as legacy emissions, will not incur a liability. However, these legacy emissions will continue to count towards a landfill facility’s threshold in order to ensure broad coverage of new waste emissions.
The tax expenditure falls to zero for the 2014‑15 year onwards, consistent with the revised CPM benchmark applying from 1 July 2014.
| 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 |
|---|---|---|---|---|---|---|---|
| - | - | - | * | * | - | - | - |
| Tax expenditure type: | Exemption | 2012 TES code: | I5 | ||||
| Estimate Reliability: | Not Applicable | * Category | 2+ | ||||
| Commencement date: | 1 July 2012 | Expiry date: | 30 June 2014 | ||||
| Legislative reference: | Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 | ||||||
Certain products are exempt from the equivalent carbon price applied to synthetic greenhouse gases. The exemptions include synthetic greenhouse gases imported or manufactured for use in medical or veterinary devices or veterinary medicines, synthetic greenhouse gases used in a manufacturing process and intentionally destroyed through a recognised destruction technology as part of the manufacturing process, and low volume importers.
The tax expenditure falls to zero for the 2014‑15 year onwards, consistent with the revised CPM benchmark applying from 1 July 2014.
| 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 |
|---|---|---|---|---|---|---|---|
| - | - | - | 2,080 | 2,090 | - | - | - |
| Tax expenditure type: | Exemption | 2012 TES code: | I6 | ||||
| Estimate Reliability: | Medium — Low | ||||||
| Commencement date: | 1 July 2012 | Expiry date: | 30 June 2014 | ||||
| Legislative reference: | Clean Energy Act 2011 | ||||||
Emissions from agricultural activities are excluded from the CPM. However, the Carbon Farming Initiative creates economic incentives for farmers and land managers to reduce carbon emissions and store carbon in the landscape by allowing them to generate carbon credits.
The tax expenditure falls to zero for the 2014‑15 year onwards, consistent with the revised CPM benchmark applying from 1 July 2014.
| 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 |
|---|---|---|---|---|---|---|---|
| - | - | - | 10 | 20 | - | - | - |
| Tax expenditure type: | Exemption | 2012 TES code: | I7 | ||||
| Estimate Reliability: | Medium — Low | ||||||
| Commencement date: | 1 July 2012 | Expiry date: | 30 June 2014 | ||||
| Legislative reference: | Clean Energy Act 2011 | ||||||
Fugitive emissions from decommissioned coal mines are excluded from the CPM. This is partly because of measurement difficulties caused by sealing a mine, but also because fugitive emissions from most decommissioned mines are expected to be below the 25,000 tonne emissions threshold. Decommissioned mines that may initially exceed the threshold are expected to fall below it within a few years.
The tax expenditure falls to zero for the 2014‑15 year onwards, consistent with the revised CPM benchmark applying from 1 July 2014.
| 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 |
|---|---|---|---|---|---|---|---|
| - | - | - | * | * | - | - | - |
| Tax expenditure type: | Exemption | 2012 TES code: | I8 | ||||
| Estimate Reliability: | Not Applicable | * Category | NA | ||||
| Commencement date: | 1 July 2012 | Expiry date: | 30 June 2014 | ||||
| Legislative reference: | Clean Energy Act 2011 | ||||||
Emissions from the Joint Petroleum Development Area and the Greater Sunrise Unit Area will be effectively excluded from the CPM from 1 July 2012 until 30 June 2015, or until final regulations are made under the Clean Energy Act 2011.
The tax expenditure falls to zero for the 2014‑15 year onwards, consistent with the revised CPM benchmark applying from 1 July 2014.