Tax Cuts Cancelled Out By Emissions Trading Costs
Tax Cuts Will Be Cancelled Out By Emissions Trading Costs
The provision of $1.5 billion in the crown accounts for tax cuts by the Labour government will be largely cancelled out by the introduction of the toughest emissions trading scheme in the world, according to the Greenhouse Policy Coalition.
The Greenhouse Policy Coalition represents large industrial employers in New Zealand, who are monitoring the design and the costs of the scheme closely.
Catherine Beard, executive director of the Greenhouse Policy Coalition says if the tax cuts are in the region of $1.5 billion, which is reported to be about $15 a week for every wage earner, a carbon price of $50/tonne CO2e, will increase household expenditure by up to $660 per annum, wiping out a good deal of that tax return.
“At the time the tax relief would take effect, in early 2009, consumers could expect an 8% increase in the price of petrol and a 14% increase in the price of diesel, as a result of the carbon trading scheme, according to the government’s own calculations” (page 29 Explanatory Note Climate Change (Emissions Trading and Renewable Preference Bill).
Catherine Beard said a carbon price of $50.00/tCo2 was not inconceivable by 2009, as currently good quality project credits (CER’s) were selling for NZ$33 tonne and the EU ETS price of carbon is $NZ 44 tonne.
Catherine Beard said the government could avoid making the scheme the most expensive in the world by making some important changes to the recently introduced Climate Change (Emissions Trading and Renewable Preference Bill).
“Like Australia we should be considering a price safety valve that caps the price of carbon to a level acceptable to our economy in order to prevent significant economic damage”, she said.
“When Minister Parker launched the NZ Energy Strategy on 11 October he said it was likely to be some time before the international and New Zealand carbon price reached $25 per tonne. Clearly the government’s prediction of carbon prices was way off the mark, and they will be exposing the New Zealand economy to much higher prices than they had contemplated.”