Carbon tax to add costs to lease agreements: Zarraffa’s Coffee CEO

By Sarah Stowe | 29 Oct 2015 View comments

The CEO of franchise chain ZarraffaÕs Coffee has spoken out about the cost of the Federal GovernmentÕs Carbon Tax after lease negotiations reveal landlords may be looking to pass on the expense to tenants.

Kenton Campbell revealed the inclusion of special conditions to cover the expenses of the tax in the fine print of Zarraffa’s leases with one of AustraliaÕs largest retail property groups. The special conditions stated “Éthe Lessor may pass this carbon or greenhouse gas emission related charge onto and recover the same from the Lessee at cost”.

Campbell is concerned added costs will be bring additional pressure to bear on the retail sector.

“If one of AustraliaÕs largest retail property groups has started planning for a rise in costs, others will soon follow suit”, he said. “Carbon Tax adds insult to injury, by not delivering a long term solution to the carbon issue and indiscriminately weakening businesses across all industries that will not be able to carry increased costs on top of Federal Pay Reforms and other recent hikes in levies and taxes.

“In our industry it wonÕt be long before coffee is an expensive commodity as we shoulder Carbon Tax impacts across transport, power, rents and so on. The tax will have a compounding effect as each link in the chain to providing a simple cup of coffee costs that bit more.”

Campbell said landlords have no choice but to pass on the expense, and warns that all businesses will need to pass on the costs to the consumer.

“We acknowledge that landlords are only making a business decision to pass on the impacts of the tax to ensure their own viability and the real truth is that most businesses will have to do the same.”

Alternatives

Campbell has suggested there are other ways to cut emissions. “Within our company we have been changing our operations and corporate culture over the past five years to great effect making both carbon and cost savings in our business.

“Incentives for power reduction are just one strategy to motivate businesses to embrace carbon reductions. The solution does not have to be a penalty system; itÕs possible that a rewards based scheme can do more to shape standards of practice and business culture, with regards to emissions, in the longer term.”

The GovernmentÕs promise of a business tax rebate to offset the carbon costs was rejected by Campbell.

“I know how hard it is to get through a financial year as a new business and my first five to 10 years were tough. Expecting businesses to slog it out for an entire year for a rebate that doesnÕt even start to cover the new costs imposed by the tax is just ludicrous.

“Shouldering the difference between the carbon tax costs and a nominal rebate, is really the difference between making it for many business owners and their families – period.”