Study warns councils not to spend cash held for Carbon Tax - Toowoomba Chronicle

COUNCILS have been urged not to spend the money raised through landfill charges to pay the carbon tax, after a study assessed how the tax repeal would affect local government.

The study, by Norton Rose Fulbright, was completed for the Australian Local Government Association in light of the carbon tax repeal last month.

Many councils listed as "liable entities" were forced to pay the tax for carbon emissions emanating from landfills across the country, including regions like Mackay, Sunshine Coast, Rockhampton, Gladstone and Toowoomba.

But now the tax is gone, the study said the only emissions which would attract a liability for councils were those in the 2013-14 financial year.

"Consequently, landfills now hold funds for which they have no associated payment obligation," the study reads.

But rather then extra income, the ALGA is still in talks with the Federal Government on what should be done with the funds, with some contracts already in place to trade the liable emissions.

The study recommended all councils with a carbon tax liability hold on to the funds until the options, whether legislative, contractual or otherwise, are sorted out.