While most of Sinclair Davidson's arguments are correct, there can and should be a very simple solution to many of the issues in his argument.
That is, to allocate the carbon tax revenue among Australian consumers on an equal per capita basis and the amount is adjusted according to the revenue. This should ensure revenue neutrality.
As Sinclair Davidson argued businesses can pass on most of the costs and also they will need to share of some the costs in emissions reduction as consumers as a whole will in terms of their real income due to rising energy costs they have to pay with little possibility to pass on or avoid.
In addition, Productivity Commission should be asked to advise on a simple, efficient and effective border adjustment that may vary broadly according to groups of countries that have a broadly and effectively similar carbon scheme and on very broad categories of products and services to make it trade neutral and take into account climate actions by others.
This should be accompanied by a country to country reimbursement scheme based on a country's relative emission level to ours’. That should ensure not only domestic fairness, but also international fairness - an important but largely and effectively ignored point by governments in industrialised countries in trying to achieving an international agreement, like that in Copenhagen in December 2009, which had an accidental effect in Australia that both major party leaders were deposed of their top posts.
Further, Sinclair Davidson arguments just expose the extraordinary influence and greedy nature of large businesses, in terms of asking for compensation and more compensation.
PS: One should note that the two simple measures have sound economics basis. Can you explain them?