Isra-Mart srl: Gilllard to scale back controversial carbon tax

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Australian Prime Minister Julia Gillard has responded to fierce criticism of her government's proposed carbon tax, halving the reach of the planned levy to just 500 companies.

Speaking on Australian television just days ahead of the announcement of the full details of the planned carbon tax, Gillard said that the levy would come into force from July 2012 and would affect just 500 firms directly, down from the original plan to impose the new tax on around 1,000 companies.

"This figure of 500 strongly reinforces the point that this is being paid by a limited number of big businesses," she told Sky News. "It is not being paid by Australian families."

The proposed tax has been characterised as a "tax on everything" by the opposition Liberal Party, and polls show that a strong majority of voters are now against the planned measure.

However, the Labor government has been at pains to argue that tax breaks will offset the impact of increased energy prices on households, while a wide-ranging package of measures is expected to protect industries that could otherwise migrate overseas to avoid the tax.

Following months of negotiations with Green and Independent MPs which Labor will rely on to pass the new bill, the government is set to announce the full details of the tax this Sunday.

The announcement is expected to detail the starting price for the carbon tax, the date at which the tax will transition into an emissions cap-and-trade scheme, and the scale of the tax cuts and industry support packages that will be on offer.

Gillard today refused to confirm or deny reports in The Age newspaper that the tax will start at A$23 per tonne.

"You will need to wait till Sunday. I'm not going to play any games about the carbon price," she said. "You will see the details on Sunday."