Isra-Mart srl: Carbon tax model shows low toll on top 100

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A $20 CARBON tax would have shaved just 2.3 per cent from the net profits of Australia's top 100 companies last year, a report has found.

BHP, Rio, Qantas, Bluescope Steel and Wesfarmers would face the biggest liabilities, it said.

The tax hit would have been 5 per cent in 2009, when profits were cut by the global financial crisis, and would have averaged 2.95 per cent over the past four years, the report by Connection Research for major Australian investors found.

Its chief executive, William Ehmcke, said the report showed ''most ASX 100 companies would be able to comfortably absorb the cost of the tax, even if they were not eligible for free permits''.

With many high-emitting electricity generators not among the 100 listed companies, they account for 24 per cent of Australian emissions - and of that the mining giants Rio Tinto and BHP Billiton emit about one third.

Also in the top emitters are Bluescope Steel and , OneSteel, likely to gain extra assistance in the final carbon package.

The report was published as Labor and the Greens continue talks to finalise the details of a carbon tax deal, including how to set the emissions reduction target for an eventual emissions trading scheme and compensation to the coal and electricity sectors.

Addressing Business Council of Australia chief executives at a private meeting yesterday the Coalition leader, Tony Abbott, said that while business generally supported market mechanisms the Coalition did not believe a carbon tax was the best way to reduce greenhouse emissions.

Yesterday the Greens and two lower house independents, Tony Windsor and Rob Oakeshott, backed the solar industry, which is arguing that a recent Productivity Commission report dramatically overestimated the costs of reducing greenhouse emissions through solar power.

The Greens senator Christine Milne called for a national strategy to stop the boom-bust cycle for the industry as governments introduced and then repealed incentive policies.

Both BHP and Rio are reaping record profits during the mining boom and are likely to receive free permits for many of their operations under the carbon deal which sources say is ''close''.

Both would have had a pre-compensation liability under a $20 tax last year of more than $300 million, but a recent Citigroup analysis suggested that would represent about 0.4 per cent of the mining giants' profits.

Mr Windsor, who will leave for a European fact-finding trip on carbon pricing when Parliament rises in July, said he had asked for a briefing from the Productivity Commission to explain its figures on the costs of both the solar industry and biofuels.

If a carbon tax deal is clinched it will be legislated in September, in time for the tax to take effect from July next year.