When the carbon tax comes into effect next July, small to medium-sized enterprises will not be directly taxed on their carbon emissions, nor will they have to report or monitor their electricity use. But SMEs will be susceptible to price rises on carbon intensive purchases and, therefore, will need to prepare.

What you can do in your small business
Improving energy efficiency already makes financial sense and it will be even more important in the next few years. To prepare for the changing business environment and to strengthen your business:

• Improve efficiency through simple actions to reduce energy consumption. Common sense measures such as turning off your standby appliances will help deliver energy savings, making a big difference to power usage and cutting your energy costs.
• Review your exposure to increased prices and costs, and the exposure of your local and overseas competitors. Keep an eye on your suppliers – some businesses may try to overstate the impact of the tax on prices.
• Review your electricity plan.  Seek a retailer that provides a product that doesn’t attract the carbon tax. This will have the added benefit of using cleaner energy. 
• Consider your pricing. Although the bulk of energy price rises (27 per cent) will be mainly due to maintenance and upgrades by energy retailers, the Government has flagged a rise in energy prices of up to 10 per cent under the tax. SMEs should consider how much of the rise they are willing to wear and how much they will pass on, given the Government will deliver billions in compensation through increased pensions and tax cuts to pay for increased prices.
• Consider GreenPower and/or offsetting. SMEs looking for the marketing and branding benefits of being an environmentally-friendly business should look into Government-approved GreenPower or offsetting emissions.
• Be careful what you say. The Australian Competition and Consumer Commission (ACCC) is warning businesses about using the carbon tax as an excuse for excessive price rises. The consumer watchdog is warning that on-the-spot infringement notices will be issued to companies or individuals found to have made false, misleading or deceptive claims.
• Consider the future. With the world heading towards a low-carbon future, investors and consumers will be concerned about high-polluting companies, including SMEs. Taking action now leaves you better placed to attract investors, consumers and protect shareholders.

The Federal Government’s Clean Energy Future package will extend the instant asset write-off threshold from $5,000 to $6,500 per item for small businesses with turnover of less than $2 million a year, from 2012-13.

VECCI has developed a range of fact sheets designed to help Victorian SMEs understand the impact of climate change-related policies on their business. For more information, visit http://www.vecci.org.au/sustainability

For more information about the Government’s Clean Energy Future package visit www.cleanenergyfuture.gov.au and www.ret.gov.au

Source: Clean Energy Future & Dun and Bradstreet