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Australia proposes carbon tax

Exhaust flows out of a car tailpipe. California's tougher emissions standards may have been struck down by the federal government, but the battle over more fuel-efficient cars may hinge on how high gas prices will go.

STEVE CHIOTAKIS: In Australia today, Qantas Airlines said a proposed carbon tax there to reduce emissions would result in higher fares. The plan would be one of the most ambitious carbon plans outside the European Union.

But as reporter Stuart Cohen tells us from Sydney, there's a lot of debate about the economic costs.


STUART COHEN: Australia's carbon tax proposal will put a price on greenhouse gas emissions. Big polluters will have to pay nearly $25 per metric ton on emissions. The country's biggest power plant puts out around 40,000 tons of greenhouse gases a day.

Here's Australian prime minister Julia Gillard.

JULIA GILLARD: As a nation, we need to put a price on carbon and create a clean energy future. At the moment those big polluters can release that pollution into our atmosphere for free.

Food and gas prices are expected to rise as a result, and critics say the carbon tax will slow the Australian economy. But to make up for it, the prime minister is offering a raft of tax breaks to the public. It's being called the largest overhaul of Australia's tax system in decades.

After three years, the tax will transition to a cap and trade system similar to one debated by the U.S. congress last year. Still, opponents say Australia shouldn't be taking on such a costly endeavor when the world's biggest polluters, the U.S. and China, are currently unwilling to cap their greenhouse gas emissions.

In Sydney, I'm Stuart Cohen for Marketplace.

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