In­flu­enc­ing tax­a­tion pol­icy

CHB Mail - - NEWS - BY SEAN BEN­NETT Crowe Hor­wath

Ur­ban or ru­ral, good, bad or neu­tral, we have all played a part to get New Zealand’s en­vi­ron­men­tal foot­print where it is to­day.

Sub­mis­sions to the Tax Work­ing Group showed New Zealan­ders are di­vided about the role of tax in en­vi­ron­men­tal and eco­log­i­cal chal­lenges. Some are ad­vo­cat­ing for en­vi­ron­men­tal taxes while oth­ers ques­tion whether it’s the right in­stru­ment.

For agri­cul­ture, en­vi­ron­men­tal taxes could be cen­tred on ni­tro­gen losses and green­house gases based on the Overseer re­ports. The pri­mary sec­tor ad­vo­cates that ni­tro­gen loss is not the same as de­grad­ing the en­vi­ron­ment, yet the two have been lumped to­gether for tax pur­poses. Busi­nesses op­er­at­ing within their ni­tro­gen al­lo­ca­tion could be taxed for be­ing com­pli­ant, ques­tion­able logic bor­der­ing on neg­li­gence.

With nearly half of New Zealand‘s green­house gas emis­sions com­ing from agri­cul­ture the group wants to in­flu­ence be­hav­iour in agri­cul­tural by bring­ing it into the Emis­sions Trad­ing Scheme. It is con­cern­ing that the group sees Overseer as a tool which is “at the pre­cise end of the spec­trum,” de­spite crit­i­cism of its ac­cu­racy. And the tax rev­enue po­ten­tial? A 5 per cent charge on agri­cul­ture emis­sions. For farm busi­nesses deemed car­bon neu­tral, po­ten­tially there could be no tax re­lief. Strong in­dus­try lead­er­ship and ad­vo­cacy by farm busi­nesses will be needed to en­sure any pro­posed en­vi­ron­men­tal taxes im­posed on agri­cul­ture are done us­ing ev­i­denced sci­en­tific work rather than a model with known in­ac­cu­ra­cies. One op­tion for farm busi­nesses is to do noth­ing. Other op­tions are to ad­vo­cate, in­flu­ence pol­icy, and chal­lenge in­dus­try lead­ers to put their best foot for­ward for the agri­cul­tural sec­tor.

This in­for­ma­tion is gen­eral in na­ture and read­ers should seek spe­cial­ist ad­vice be­fore mak­ing fi­nan­cial de­ci­sions.

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