In the lead-up to the introduction of the carbon tax on July 1, there has been considerable focus on the potential for price gouging – inflating prices beyond the cost increases reasonably attributable to the tax. In recent days, this has been fuelled by a letter sent to small business from the opposition, urging them to place flyers in their shops apologising for any carbon-tax related price increases.
What business can and cannot claim following the introduction of the carbon tax
Businesses are generally free to increase or lower their prices as they choose. In the context of the carbon tax, there are no specific laws preventing price gouging. However, the law does prohibit false or misleading claims regarding the cause of any price hike. For example, if a business reasonably estimates that its costs have increased by 5% as a result of the carbon tax then ..
In his letter to members, Minerals Council chief executive Mitch Hooke says that in current day Australia, major policy battles are fought and won in the media and that miners must spend accordingly.
So is Mitch Hooke right when he says the “new paradigm is one of public contest through the popular media more so than rational, effective, considered consultation and debate”?
Federal Treasurer Wayne Swan has announced that the government will provide the competition watchdog with almost $13 million in extra funding to tackle carbon tax-related price-gouging.
In this context, price-gouging refers to business inflating prices beyond the cost increases reasonably attributable to the tax.
The Australian Competition and Consumer Commission’s extra funding will go toward hiring a team of 20 staff dedicated to identify and investigate price-gouging.