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Report adds little to carbon tax debate

16 December 2005

Self-serving report adds little to carbon tax debate

A new report that slams carbon tax is just another thinly disguised attack from big business on one of the few positive moves New Zealand has made toward saving the planet for future generations, the Green Party says.

The report, Carbon Tax: Impact on New Zealand Enterprises, was paid for by Business New Zealand, the Coal Association, the New Zealand Seafood Industry Council and the Vegetable and Potato Growers Federation (VegFed), two of whom are members of the anti-carbon tax lobby group, the Greenhouse Policy Coalition.

The analysis, conducted by Price Waterhouse Coopers, focuses on the apparent impact of a carbon tax on seven high-energy use businesses hand-picked by those who paid for the report. It contains numerous assumptions and makes just as many important omissions, Co-Leader Jeanette Fitzsimons says.

"It ignores the fact that if you tax carbon you will need to tax other things less for the same amount of revenue. The calculations seem to assume that the revenue from the carbon tax disappears down a black hole and does not contribute further to the New Zealand economy.

"The analysis is also flawed in that it assumes these businesses, who are high users of energy, will do nothing to increase their energy efficiency and thereby reduce the amount of carbon tax they will pay."

The report is contradicted by the work done in the early 1990s by Simon Terry and Associates and BERL, which looked at the effect of a carbon tax with various different types of offsetting tax reductions and found they were over all mostly good for the economy.

"It is essential that if we want to influence people's decisions about what fuel to use for the next power station, what sort of car to buy, how far to live from work, and whether to send freight by rail or truck, there must be a price for emitting carbon. Otherwise the pollution is being subsidised by the environment and by future generations who will have to suffer extreme climate change.

Business New Zealand say they recognise that something must be done to reduce carbon emissions, but they prefer a subsidy for renewables and efficiency, paid by the taxpayer, rather that a charge on polluters and their customers. It is not a surprise that they would take this stance.

"In reading the report it is clear the impact of carbon tax on these businesses was minor compared to the economic pressures of increased competition from a free market economy and the effects of a strong New Zealand dollar. However, I notice these groups are not out trying to prevent the Government signing up to free trade agreements which will cost these businesses even more in future."

ENDS

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