Tax, then subsidise..huh?

Don Stallman’s question, “Why tax an industry and give it back to us in subsidies?” (The Australian, Letters, 11/6), is understandable given that most of the media spreads fear of the carbon tax instead of explaining how it works. But the answer is simple: low-carbon products will be cheaper than high-carbon ones and will thus be chosen by consumers, giving producers an incentive to switch to low-carbon production. The compensation to consumers ensures that the only losers will be producers who are slower than their competitors to switch. The market will do its job and eventually carbon emissions, the tax and the compensation will all be minimised.

What baffles me is why such a textbook market mechanism is opposed by conservatives. Maybe they’re mad they didn’t think of it.

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