Tax Working Group recommends government includes agriculture sector in a reformed Emissions Trading Scheme

The Tax Working Group (TWG) is recommending the Government adds the agriculture sector to the Emissions Trading Scheme (ETS).

"[The TWG] recommends that all emissions face a price, including from agriculture, either through the ETS or a complementary system," the TWG's final report says.

The TWG is also recommending that "some or all" environmental tax revenue should be used to help fund a transition to "a more sustainable, circular economy."

Below are the recommendations covering the environment, including agriculture, water, waste and transport from the TWG's final report.

Environmental and ecological outcomes

5. The Group recommends the Government adopts the framework in Chapter 4 of this report for taxing negative environmental externalities.

Greenhouse gases

The Group:

6. supports a reformed Emissions Trading Scheme (ETS) remaining the centrepiece of New Zealand's emissions reduction efforts but recommends it be made more ‘tax-like' - specifically, by providing greater guidance on price and auctioning emissions units to raise revenue (as recommended by the Productivity Commission).

7. recommends periodic review of the ETS to ensure it is fit for purpose and is the best mechanism for pricing greenhouse gas emissions.

8. recommends that all emissions face a price, including from agriculture, either through the ETS or a complementary system.

Water abstraction and water pollution

The Group:

9. recommends greater use of tax instruments to address water pollution and water abstraction challenges if Māori rights and interests can be addressed.

10. recommends further development of tools and capabilities to estimate diffuse water pollution to enable more accurate and effective water pollution tax instruments.

11. recommends introducing input-based tax instruments, including on fertiliser, if significant progress is not made in the near term on implementing output-based pricing measures or other regulatory measures.

Solid waste

The Group:

12. supports the Ministry for the Environment's review of the rate and coverage of the Waste Disposal Levy.

13. supports expanding the coverage of the Waste Disposal Levy.

14. recommends a reassessment of the negative externalities associated with landfill disposal in New Zealand to ascertain if a higher levy rate is appropriate.

15. recommends a review of hypothecation arrangements of the Waste Disposal Levy to ensure funds are being used in the most effective way to move towards a more circular economy.

Transport

16. The Group supports current reviews by the Government and Auckland Council into introducing congestion pricing.

Concessions

The Group:

17. recommends costs associated with the care of land subject to a QEII covenant or Ngā Whenua Rāhui be tax deductible.

18. recommends that the Government consider allowing employers to subsidise public transport use by employees without incurring fringe benefit tax.

19. recommends that the Government review various tax provisions specific to farming, forestry and petroleum mining with a view to removing concessions harmful to natural capital, while also considering new concessions that could enhance natural capital.

Other matters relating to environmental taxation

The Group:

20. recommends some or all of environmental tax revenue should be used to help fund a transition to a more sustainable, circular economy.

21. recommends consideration over the longer term of new tools, like an environmental footprint tax, or a natural capital enhancement tax.

22. recommends the Government strengthen its environment tax capabilities, including with the Parliamentary Commissioner for the Environment.

23. recommends that the Government commission incidence studies to better understand who will incur the costs of new environmental taxes and to design appropriate mitigation measures.

24. recommends further work to rigorously assess how taxes can complement other environmental policy measures and to work through the design principles identified in the Group's framework for taxing negative environmental externalities.

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7 Comments

Yes, farming should be included - but the 'scheme is flawed from the get-go.

In physics terms, we inherited a planet with a lot of carbon locked away underground. We used it as energy, and as feedstock for everything from plastic to fertiliser - but the point is that we dug it up and put it into the above-ground environment. We evolved to live when it was locked away, as did most of what inhabits the planet currently.

So full sequestration is the only 'trade' worth contemplating, and of course that takes energy - too much for us to do it and keep up or current work-rate. So we haven't, and won't.

But 'trading' carbon won't alter anything. Cap-and-trade under a reducing cap might. The problem with 'trading' is that most of the 'offsets' (just look at Air NZ) are not really carbon-sinks in any meaningful sense.

"The problem with 'trading' is that most of the 'offsets' (just look at Air NZ) are not really carbon-sinks in any meaningful sense."
While I agree livestock produced methane may be problematic, it is still only recycling within the existing system while adding no new atmospheric carbon. Fossil fuels on the other hand add to the cycle and the offset trees are just part of the cycle, eventually they die and rot or are burnt or whatever but the carbon is never sequestered as it was. Ironically on breaking down, some of the carbon will be converted to horror of horrors methane. It really is starting to bug me that even those involved in climate science seem to believe in the offsets, I guess it lowers the guilt on using transport.

So we are putting it back to the atmosphere where it originated from.

Why should that be a concern ?

Every carbon atom in every molecule of limestone, gas, hydrates, oil and coal originated in the atmosphere. Simply returning it to the atmosphere while capturing the energy benefits for our developed society should not be a problem.

I find thinking helps,.

Are you responsible for progeny (it's an act that doesn't require much cognitive capacity, so it's possible)? You think they're going to thank us for our selfish extraction/failure to mitigate little burst? I doubt it.

https://www.theguardian.com/science/2018/sep/01/swedish-15-year-old-cutt...

Compare her to your comments. Time we moved on, sorry.

And agribusiness-type farming is only the act of turning fossil fuels into food. Quite a temporary arrangement. We needed another anyway - and it is probable that the 'other' will include population reduction at scale.

Oh, and we couldn't have lived in the Carboniferous Period. Just sayin.

You may care to explain how the many fossils in the coal and limestone seams got there ?

Life seemed to be quite OK in this period.

Ok for vegetable matter.

8. recommends that the Government consider allowing employers to subsidise public transport use by employees without incurring fringe benefit tax.
DO IT