A tax on bottled water smacks of extortion
t Belfast near Christchurch a few months ago people were out on the streets protesting that a Chinese water bottling company had resource consent to draw from an aquifer previously used by a wool scouring plant. It wasn’t the first such protest of its kind around the country by any means but it struck me then how unprincipled, how arbitrary this clamour for a tax on bottled water has been.
These folk didn’t care how much of Canterbury’s fresh, precious, artesian water the wool scour had sloshed around for its own benefit all the years it was operating until it moved to Timaru in 2015, but as soon as they heard a fraction of that water is going to be bottled for people to drink, they were outraged.
Why? Because the people were Chinese? Let’s not go there. Because it was going offshore? We’re hardly short of water here and we don’t worry about our water being exported in the form of beer, wine, butter or kiwifruit. What is it about the export of pure, clear, unadulterated New Zealand drinking water that needs to be especially taxed? Maybe the business seems too easy. The water, “our water”, is just lying there in the ground and these companies take it for nothing, sell it at a premium — it’s in shops at about twice the price of Coca- Cola for goodness sake — and we feel like mugs.
People who have been in business often assume it is easy. The popularity of bottled water is a mystery to me. If somebody had tried to talk me into investing in the original idea that New Zealanders would pay to drink water from plastic bottles when a tap is never far away, I’d have scoffed at the prospect. That’s why I’ll never be rich.
As soon as the idea came to market it became common to see people clutching bottles in Queen St as though they were crossing the Kalahari. I still marvel that so many people feel the need to sip water so often. How did they survive before somebody thought of providing dinky little bottles with a nozzle you can open with your teeth.
Like many a business, the premium probably has more to do with image and style than the product. Damned if I can taste any difference in the water. It’s a classic example of the sort of consumerism memorably lampooned by the 1960s American countercultural comedian George Carlin who said, “Nail two bits of wood together and some schmuck will buy it from you.”
So maybe it’s the schmuck factor that makes so many of us so determined to tax bottled water. But I worry that the motive is worse than that. It appears to be an attitude to taxation that does not care for principle or consistency or fairness. It doesn’t care that bottled water is a tiny fraction of the torrents of fresh water we freely spray on farms, gardens, office windows, factory floors and cars, and use to fill swimming pools, mix cement, sluice drains, flush down toilets and sundry other things we do with it in this rainswept corner of the southern ocean.
Bottled water is fair game because it is sitting there in shops, visible, easy to measure, easy to tax. It is the way a Mafia taxes its territory. If it looks like easy pickings, hand some over. It’s not principled taxation, it’s called extortion.
Respectable political parties do not tax on this basis, but public pressure has caused National to be contemplating a tax on bottled water and Labour to promise one for this election. To its credit, Labour is proposing a slightly broader tax applying to farm irrigation and unspecified other commercial uses. But that has presented National with a target because most people don’t care about water being free for irrigation or commercial uses other than bottling it for human consumption.
Economically there is something to be said for a water price, especially if it is set by a market in rights to draw a sustainable amount from rivers, lakes and aquifers. A standard charge by a public body or an iwi guardian would be second best, so long as the charge was based on the quantity drawn regardless of its commercial use. Labour’s proposal is highly selective. Bottlers would be charged by the litre, irrigation by 1000 litres. Rates set for other commercial uses would vary depending on the abundance of water in a region, its quality and the use to be made of it.
A tax based partly on use would probably punish those who use the resource for its best commercial return and exempt those who waste it. The proposal panders to public envy of entrepreneurial success and the power of extortion. We’re better than that.
But that has presented National with a target because most people don’t care about water being free for irrigation or commercial uses other than bottling it for human consumption.