Businesses are understandably concerned about the impacts of the carbon tax on costs and profitability. They are also worried about the risk that they could inadvertently find themselves on the wrong side of the ACCC.
?All businesses are entitled to try to lift their prices to recover extra costs associated with the carbon tax and the ACCC has no role in monitoring or limiting the extent to which businesses can attempt to do this,? says Innes Willox, the chief executive of the Australian Industry Group.
However, Willox says, the ACCC does have a role relating to misrepresentations that businesses might make if they overstate the extent to which the carbon tax is pushing up their costs and forcing them to raise their own prices.
A long-standing feature of Australian Consumer Law is that businesses are not permitted to mislead their customers. In the case of the carbon tax, businesses are not allowed to misrepresent the extent to which the carbon tax is behind any price increases.
This has implications for businesses that pay the carbon tax and many others downstream.
Those who pay directly include energy producers, heavy industrial businesses, coal miners and some council tips. In some cases businesses with these direct liabilities will pass on at least some of the tax they pay to their customers in the form of higher prices.
For most other businesses, the major impact will come from increases in electricity, gas and some non-energy inputs.
When costs rise, a business will assess whether it can raise prices to avoid a reduction in profitability while some will not raise prices in case they lose ground to their competitors.
In a recent Ai Group survey of 621 services, manufacturing and construction businesses, 42 per cent stated they would try to raise prices on at least some of their goods and services as a result of the carbon tax.
Willox concludes that businesses need to be careful when making claims about the impact of the carbon tax on their prices but they have every right to try to recover extra costs in the market place and they can be confident that the ACCC has no interest in preventing these legitimate price rises.
Source: Ai Group