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

 

Parliament Today:

Werewolf: The Defence Pretence

Last year, the world began spending more money on weapons again, for the first time since 2011... New Zealand belongs to a region – Asia and Oceania – where military spending rose sharply in 2015, by 5.4 per cent. More>>

ALSO:

Gordon Campbell: On Not Crying Foul, Argentina

So a couple of guys found to be criminally liable of environmental pollution in Argentina lodge an application with the Overseas Investment Office… in order to buy some prime New Zealand rural land. Seems that their factory back home had carelessly and/or intentionally discharged toxic waste into the Lujan river. Bummer... More>>

ALSO:

Urban & Rural: $303m To Merge And Modernise New Zealand’s Fire Services

Internal Affairs Minister Peter Dunne today announced funding of $303 million over five years to combine urban and rural fire services into one organisation from mid-2017. More>>

ALSO:

High Trust Regime: What Did The PM Tell His Lawyer About Foreign Trusts?

The Government stopped the IRD from reviewing New Zealand foreign trusts shortly after the Prime Minister’s lawyer wrote to the Revenue Minister claiming John Key had promised him the regime would not be changed. More>>

ALSO:

Road Crime: Wicked Campers Vans Classified As Objectionable

The definition of publication includes any "thing that has printed or impressed upon it, or otherwise shown upon it, 1 or more (or a combination of 1 or more) images, representations, signs, statements, or words", The Classification Office has previously classified such 'things' as billboards, t-shirts, and even a drink can. This is the first time the Classification Office has classified a vehicle. More>>

ALSO:

'When New' Repairs: Landmark EQC Settlement

The Earthquake Commission has cut a deal with 98 Canterbury homeowners that affirms the government entity's responsibility to repair earthquake-damaged property to a 'when new' state, as well as covering repairs for undamaged parts of a property and clarifying its position on cash settlement calculations. More>>

ALSO:

Gordon Campbell: On Kiwirail’s Latest Stint In The Dogbox

The denigration of Kiwirail continues. The latest review (based on a 2014 assessment) of the options facing the company have enabled Kiwirail to be hung out to dry once again as a liability and burden on the taxpayer. More>>

ALSO:

Royal Society Report: Good Opportunities To Act Now On Climate Change

There are many actions New Zealand can and should take now to reduce the threat of climate change and transition to a low-carbon economy, a report released today by the Royal Society of New Zealand finds... More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news