Media release

4 May 2005

*Who wants a tax on growth?*

A tax of $15 per tonne of carbon emissions will take around $500 million out of our pockets every year, says Business NZ Chief Executive Phil O’Reilly.

“It’s a big reduction in purchasing power that will slow the economy down. Hardest hit will be motorists paying more for petrol, and manufacturers and other businesses that need energy to produce their goods and services.

“Our economic growth depends on energy use. Taxing energy is just taxing growth.

“The ridiculous thing is that it won’t help reduce emissions, as there are no non-carbon based alternatives that people can use. It’s a punishment, not a policy.

“The Government is making much of the ‘targeted business tax cuts’ in this year’s Budget, but our concern is that the carbon tax will just claw it all back again.

“The measures that will supposedly give the worst affected businesses relief from the carbon tax are complicated and perverse. Only around 40 companies will get exemptions, and the grants for smaller companies will bring undesirable incentives - all companies will be paying for grants which will be distributed to only a few, in other words companies will be taxed to fund their competitors.

“A better approach would be to ditch the tax and have a policy that would let all businesses contribute to energy efficiency, for example an accelerated depreciation regime on new, energy-efficient machinery.”

ENDS

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