Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Russell’s Carbon Tax equivalent to 4.5% rise in company tax

Russell’s Carbon Tax equivalent to 4.5% increase in company tax

ACT Leader Jamie Whyte

Last week, the Greens announced a plan to replace the emissions trading scheme (ETS) with a greenhouse gas tax.

Industrial firms that emit greenhouse gases will have to pay $25 per tonne. Farmers will have to pay $12.50 per tonne. This is a BIG new tax, the equivalent to lifting the corporate tax rate from today’s 28% to 32.5%.

The tax will, of course, be harmful to the owners, employees and customers of businesses that emit greenhouse gases.

But the policy is even worse than that. It will also defeat its own purpose.

The Greens claim that this tax will reduce the amount of greenhouse gas emitted and thereby reduce the chance of the climate warming. In fact, their policy will increase global greenhouse gas emissions.

They have again made the mistake of ignoring what other governments are doing.

Suppose that to produce a kilo of milk (dairy fat) farmers in country A emit more greenhouse gas than farmers in country B do. If the governments of both countries impose an equal greenhouse tax, then producing milk in country A will become more expensive than in country B, and profits will be lower. The production of milk will migrate from A to B and less greenhouse gas will be emitted globally. The desired result.

But now suppose that only country B, where emissions are lower, imposes the tax. Now production costs are higher in country B, and production will migrate to country A. This will increase the global greenhouse gas emissions caused by milk production. This is the effect of The Greens’ policy.

New Zealand milk production releases less greenhouse gas than American and European production because our benign climate means production here consumes less fossil fuel, even accounting for exportation.

But the governments of the US and EU do not tax their farmers for emitting greenhouse gases. The Greens’ policy will therefore divert dairy production from low-emitting Kiwi dairy farmers to high-emitting European dairy farmers.

Such a policy bungle would be funny if only the Greens did not have a material chance of being an influential part of the next New Zealand government.

Actions to reduce CO2 emissions in other countries will be limited to modest unilateral reductions of a largely token character. The Green Party should stop saying that the transition to a carbon neutral economy will be easy and painless.

The equivalent of a 4.5 percent rise in the company tax is a major burden on the economy, wages and jobs.

The chances of India, China and the rest of the Third World agreeing to forego or even slow their economic development to fight global warming is zero. Unilateral reductions in CO2 emissions by New Zealand simply make us poorer and less able to cope with the uncertainties of the future. Becoming richer and adapting to change is the only game in town for both the developed and the developing worlds.

As the economist David Friedman noted this year, preventing global warming is an international public good, which will therefore be greatly under-supplied. Adaptation to climate change is a private good that will be supplied at the optimal level by the market like any other privately produced good. Adaptation reduces the negative aspects of any global warming without stopping any of its positive effects, such as increased agricultural productivity.

Unless most other countries contribute in reducing carbon emissions, New Zealand’s efforts make no difference to the extent of global warming. The Greens want to make us poorer and deprive us of resources we could use to adapt to any warming that might happen.


© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell:
On The Last Rites For The TPP

The Trans Pacific Partnership trade deal is one of those litmus issues that has always had more to do with one’s place on the political spectrum than with any imminent reality.

To date, the Greens have opposed (a) a wide range of the leaked content of the TPP (b) the secretive way it has been negotiated and (c) the undemocratic way in which any final document would be ratified. Labour has shared some of those concerns, but while remaining generally supportive of the deal itself.

National has, for its part, been very enthusiastic about the TPP, while still giving assurances about Pharmac being protected... For the TPP’s friends and foes alike though, the end now seems nigh. More>>

 
 

Gordon Campbell: On The Farcical Elevation Of David Seymour

With the election won, it’s time to find jobs for the boy. David Seymour is the Act Party’s latest scrounger to be rewarded by the National Party, and not only with a seat in Parliament. More>>

ALSO:

As Key Mulls Joining ISIS Fighting: McCully Speech To UN Backs Security Council Bid

It is an honour to address you today on behalf of the Prime Minister and Government of New Zealand. Our General Election took place last week - our Prime Minister Rt Hon John Key is engaged in forming a government and that is why he is unable to be here in New York... More>>

ALSO:

Labour: Cunliffe Triggers Party Wide Leadership Contest

David Cunliffe has resigned as Labour Leader, but says he will seek re-election... If there is any contest the election will have to go through a process involving the party membership and union affiliates. More>>

ALSO:

Flyover Appeal: Progress And Certainty, Or Confusion And More Delays?

Lindsay Shelton: The Transport Agency, embarrassed by the rejection of its flyover alongside the Basin Reserve, says it’s appealing because the decision could “constrain progress.” Yet for most clear-sighted Wellingtonians a 300-metre-long concrete structure above Kent and Cambridge Terraces would in no way be seen as progress… More>>

ALSO:

Gordon Campbell: On Cunliffe’s Last Stand

Right now, embattled Labour leader David Cunliffe has three options. None of them are particularly attractive for him personally, or for the Labour Party... More>>

ALSO:

Key Seeking 'New Ideas': Look To Children’s Commissioner On Poverty - Greens

John Key should not reinvent the wheel when it comes to ideas for tackling child poverty, and instead look to the recommendations of the Children’s Commissioner’s Expert Group on Child Poverty, Green Party co-leader Metiria Turei says. More>>

ALSO:

'Safe To Re-Enter' - OIA Docs: Safety Is Absolute Priority At Pike River Mine

“We understand that the time it is taking to complete our evaluation of the risks is frustrating for the family members and we are trying to complete this work as quickly as we can,” Ms Dunphy says. “It is Solid Energy’s responsibility to make this decision and we will do so, once we have all the information required to make a fully-informed decision.” More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
More RSS  RSS
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news