The Institute of Chartered Accountants in Australia (the Institute) is calling for a series of complementary tax measures to be considered alongside the carbon price.

Implementation of targeted measures would serve to ensure businesses and individuals are encouraged to transition towards a low-carbon economy. 

Potential policy initiatives could include those which incentivise renewable energy projects and workforce relocation to remote regions, tax measures encouraging energy efficiency improvements, and allowances for the primary production sector.

The Institute’s tax counsel, Yasser El-Ansary, says the case for integrating such measures into the existing tax system is derived from the need to support business innovation through tax policy.

“The structural change which comes from the proposed carbon pricing package is going to be a significant business issue facing this country. The government has the opportunity right now to look at the big picture policy response, and this has to include adopting a range of complementary tax measures. Putting a price on carbon alone will not be enough,” he says.

The government announced in February 2011 that it proposes to introduce a fixed carbon price from 1 July 2012, before moving to a cap-and-trade emissions trading scheme within three to five years.

The Institute has previously recommended that all revenue generated through a price on carbon should be directed back to targeted compensation policies and to support investment in 'green' technology and innovation.

"Revenue generated from the price on carbon should not find its way back into consolidated government revenues," Mr El-Ansary says.

Further details of the complementary tax measures can be found on the Institute’s website.