IMF document backs carbon tax policy

The imf claims the controversial carbon tax is necessary in reducing carbon dioxide emissions 16000646 800481041 0 0 7041483 300

The federal government's carbon tax has attracted much controversy over the past months, with many households bracing for the impact of a drastic increase in electricity and gas prices.

But a new document from the International Monetary Fund (IMF) released last week suggests that Australia is on the right path.

The policy guide, titled Fiscal Policy to Mitigate Climate Change, suggests that "a reasonable minimum price to aim for seems to be around US$20 (AU$19.76) per tonne".

That number is only slightly less than that set in Australia - businesses who find themselves applicable to carbon pricing will be paying $23 per tonne when the tax comes into effect on July 1.

The tax will increase to $24.15 per tonne in 2013 and then to $25.40 in 2014-15.

While many people have suggested that the tax is too high, and will put further pressure on families that are already struggling under a difficult economic climate, the IMF believes that the policy is a necessary step towards reducing carbon dioxide emissions.

"The world needs strategies for adapting to the medium and long-term consequences of climate change, and these have fiscal implications."

The United States does not currently have a nationwide carbon taxing policy.

Posted by Callum Fleming