Australian government on Sunday introduced a controversial carbon tax that businesses will have to pay for their emissions, amid protests and apprehensions that it will hamper the economy.

Beginning from today, over 300 businesses will be made to pay $23 for every tonne of carbon emission they produce, with Prime Minister Ms Julia Gillard stating that putting a price on carbon will help protect the environment and strengthen economy.

The businesses will receive some compensation in the form of tax offsets and credits, but still say they will have no choice but to pass on the cost to consumers, a report in ABC said.

The Government is also compensating low-income earners and says life will go on for Australian households.

Defending the levy, Ms Gillard said when the Goods and Services Tax (GST) was introduced, she was very concerned about how it would impact households, but Australians have come to accept it.

“People have already seen pension increases and family payment increases and family payment increases and this assistance to families around the country will continue.

Businesses have got themselves ready for carbon pricing. New investments are being made,” she said.

The Australian capital also witnessed street protests against the tax.

However, opposition leader Mr Tony Abbott said the carbon tax will have a negative impact on the Australian economy.

He told the Liberal Party’s national conference in Melbourne yesterday that the Australian public can be “100 per cent certain” when there will be no carbon tax under a government he leads.

“It will raise every family’s cost of living, it will make every job less secure but it won’t help the environment,” he said commenting on the new levy.

“Australia’s domestic emissions will be 8 per cent higher, yes, higher by 2020 despite a carbon tax of $37 a tonne.”

Australia is one of the highest per capita producers of carbon emissions. From today, along with the introduction of the carbon tax the tax-free threshold will triple translating into a tax cut for more than seven million people and some low-income family payments will also be boosted.

Businesses will also get relief in the form of offsets to tax losses against previous tax they have paid over the past two years and an instant asset write-off.

The Government is paying for the carbon tax compensation with revenue from the mining tax which will also start to bite into resources industry profits from today.

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