Businesses and consumers should be aware that there is no GST on carbon price permits and should raise any concerns about misleading pricing claims with the Australian Competition and Consumer Commission.
Under the carbon price mechanism, less than 500 large emitters are required to buy a permit for each tonne of pollution they release into the atmosphere.
The price of permits is $23 a tonne in 2012-13. The GST laws have been specifically amended to ensure that there is no GST payable on these permits.
According to media reports today, one waste company is advising its customers that the carbon price is $25.30 a tonne including the GST.
This is wrong and the Government has referred this claim to the ACCC.
Any business jacking up their prices and falsely blaming the carbon price could be liable for fines of up to $1.1 million.
The carbon price does not change how the GST operates. The GST does not apply to the carbon price, it applies to the supply of goods and services.
Treasury's modelling found the carbon price would increase the Consumer Price Index by 0.7 per cent, an impact which includes the GST on final goods and services.
This translates into a weekly increase in costs for the average household of $9.90 and the Gillard Labor Government is providing $10.10 per week on average in assistance through tax cuts, higher family payments and increases in pensions and other benefits.
By comparison, when the GST was introduced in 2000 it increased the CPI by 2.5 per cent.