Greens' tax proposal earns unlikely praise

Green Party co-leader Russel Norman. Photo / File

The Green Party's proposal to tax carbon polluters has earned some praise from unlikely sources.

The Taxpayers' Union, a right-leaning lobby group, gave a vote of support yesterday to Greens' plan to charge industry for carbon emissions and return the revenue to households and businesses.

Executive director Jordan Williams said the policy appeared to provide a simpler, more transparent system than the Emissions Trading Scheme and could reduce New Zealand's tax burden.

"So long as the Greens continue to indicate that money raised by a new carbon tax will be used to reduce taxes on personal and company income, we're broadly in favour of a carbon tax over the existing ETS.

"A carbon tax would reduce compliance and administration costs and result in a stable price for emitters."

Right-wing media commentator Matthew Hooton also appeared to support the policy, saying it was stronger than Labour and National's climate change plans.

He tweeted: "Embarrassing for all concerned, but on first glance I think I support @NZGreens climate change policy over @NZNationalParty or @nzlabour."

The policy, revealed at the party's AGM in the weekend, would charge all sectors except agriculture $25 per tonne, costing industry $955 million a year. This would be returned to households via a tax break on the first $2000 of income and by cutting the company tax rate by 1 per cent.

The prospect of a charge on carbon stirred some concern within the farming community.

Federated Farmers climate change spokesman William Rolleston said the policy would be counter-productive because it would push agricultural production offshore, where farming was not as carbon efficient.

Dairy farmers would pay half-price ($12.50 per tonne) for their emissions, but they were expected to be worst affected by a carbon charge.

An analysis by economic consultancy BERL predicted it would cost farmers $30 a cow and reduce the profits of the average dairy farm by 12.5 per cent.

New Zealand produces around 76 million tonnes of CO2 equivalent a year, 25 per cent more than in 1990. Agriculture contributes around 46 percent of total emissions, roughly half of which was from dairy farms.

The policy would need support from Greens likely coalition partner Labour to get off the ground in a potential coalition deal.

Labour are not commenting on the proposal.