Carbon tax primitive option

Wednesday, May 4th, 2005

Carbon tax primitive option

The carbon tax announced today will help keep new investment on hold and impose another cost setback to New Zealand's exporters, the Employers & Manufacturers Association (Northern) says.

Adding the new tax at this time of increasing business uncertainty will undermine business confidence by discouraging investment in workplace productivity, said EMA's chief executive Alasdair Thompson.

"Both business and government are keen to work on lifting productivity and the new tax won't help," Mr Thompson said.

"You have to wonder if cabinet ministers talk to each other these issues.

"Applying a tax is probably amongst the worst ways for New Zealand to address our commitments under the Kyoto Protocol.

"Since we are the only country amongst our main trading partners to sign the protocol, the least Government could do is demonstrate extreme sensitivity to its impacts on our exporters.

"While it will raise the cost structure of the whole economy thereby damaging our competitiveness, business also has major misgivings on whether the new $570m tax will be fully recycled to business.
"Already a new Government bureaucracy is in place to oversee climate change policy, and measure and enforce standards.
"Large new compliance costs are expected of companies seeking Negotiated Greenhouse Agreements (NGA) or incentives to manage emissions.
"The costs will be borne across the economy through higher domestic prices and reducing job opportunities over time.
"Small and medium sized companies are likely to be the big losers because they don't qualify for an Agreement to exempt them from the tax.

"Business would be far more positive towards the government's particular response to the Kyoto Protocol if it offered incentives to all New Zealanders and companies seeking better energy efficiency.

"For example, a rapid write off of all capital costs associated with achieving energy efficiency would be better, as would work with electricity suppliers and home consumers to introduce time metering and variable time pricing.

"Simply applying a carbon tax is a primitive option."

ENDS

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