If Australia needs substantially more revenue, the options include taxing carbon and resource profits, taxing wealth more heavily and reforming the GST.

In Part One of this article I made the case that the Australian government needs to raise more revenue to ensure adequate service provision and restore the budget balance. My rough estimate is that the extra revenue needed is equivalent to about 4 per cent of GDP, or around $115–120 billion.

So far, however, the Albanese Government has only sought additional revenue by reducing unwarranted tax concessions by adjusting the capital gains discount, negative gearing, and the taxation of family trusts. These changes were paired with promised new tax relief for workers: a $1,000 instant deduction from 2026–27 and a $250 tax offset from 2027–28. In short, this extra income tax revenue will make no contribution to ensuring adequate service provision and a balanced budget.

Instead, we need to consider other much more substantial sources of additional government revenue.

The most obvious and best source of additional revenue would be to introduce a carbon tax, which would not only raise more revenue, but most importantly would also act to ensure that Australia can achieve its net zero targets for carbon emissions, and much more effectively and cheaply.

As documented by the Superpower Institute, present policies are unlikely to allow Australia to meet its net zero commitments. Renewable energy is reducing the reliance on carbon-based electricity, but “sectors representing nearly 40 per cent of Australia’s emissions in 2005 have not even begun to reduce. Transport emissions have risen by more than 20 per cent, industry by about 7 per cent and stationary energy by more than 20 per cent. Almost all progress has come from land-use change.”

The........

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