Businesses face fines up to $1.1 million if they indulge in price gouging as a result of the carbon tax the Federal Government has warned, with legal experts urging start-ups to tread cautiously.
The Australian Competition and Consumer Commission will have the power to prosecute businesses that take advantage of the new tax via price gouging.
Treasurer Wayne Swan said the ACCC will “keep a watchful eye out for any shonky attempts to jack up prices and falsely claim it is related to the carbon price”.
A new carbon price squad will be similar to the team of ACCC inspectors that targeted businesses rorting consumers after the GST was introduced.
The ACCC will employ at least 20 new staff to monitor and investigate false or misleading claims about the impacts of the tax and the government has provided the commission with $12.8 million in funding over four years to carry out its new role.
Individuals caught profiteering face maximum penalties of $220,000 and six new government agencies and 20 new programs will be created to oversee the carbon tax.
The tax will force the country’s 500 worst polluters to pay $23 for every tonne of carbon they emit. Critics say polluters will pass on higher costs to ordinary Australians and will lead to job losses.
Russell Zimmerman, executive director of the Australian Retailers Association, says retailers will be forced to pass costs on to consumers given their vulnerable position in the supply chain.
“Retailers are at the very end of the manufacturing and supply chain and cost increases along the line will ultimately be caught by them,” Zimmerman said.
“The government’s planned carbon tax fails to offer retailers any compensation for being the catchment point for price rises, leaving them no choice but to pass these costs on to customers.”
Brendan Bateman, a partner at law firm Clayton Utz, says supply contracts entered into during the past five years are likely to have been drafted in contemplation of some form of carbon price.
“One exception is operators is in the transport sector who may find that their carbon price pass-through clauses are now irrelevant, given the government’s recent exclusion of transport fuels from the carbon price mechanism,” Bateman says.
“They will need to look at their contract provisions regarding fuel prices, excise taxes and excise credits.”
The government insists that the tax will only lead to a 0.7% rise in the cost of living because of a proposed assistance package, worth $9.2 billion in compensation, for industries affected by the tax.
Nine out of 10 households will receive some kind of assistance in the form of income tax cuts and payments.