Suffocation by taxation

28 Feb 2019


We are currently analysing the final report of the Tax Working Group (TWG), and offering our views on what has been recommended. It seems there may have been a significant opportunity missed; taxing air. 

Air, like water, is needed for humans, animals and plants to survive. Air, just like water, is available as a free natural resource. All things considered, applying the principles the TWG has set out it is only fair and equitable; if we’re going to tax water and nutrients (fertiliser), we might as well tax the very air we breathe too.

Developing the methodology upon which to base this air tax could be relatively simple, using what has already been proposed for fertiliser. A theoretical allocation and use model could be developed that estimates how much air each human, animal, and plant may use, and the tax could be based on that approximation. This isn’t very accurate, but there would be a tax sum to be paid.

This has a ripple effect into charges that may be imposed under the Emissions Trading Scheme (ETS) on the use of water and fertiliser; there could be both taxes and ETS charges, doubling the tax cost of using water and fertiliser. An air tax (following the logic for water and fertiliser taxes and ETS charges) would also encourage more environmentally sustainable outcomes, as less air will be used to live and grow crops.

But in the real world, life doesn’t work that way. The amount of air or water that will be used will be what is required to sustain life. The use of air, water, or nutrients cannot be set by the rate of taxes; it is set by the needs of the human, animal or plant. A plant cannot survive with less water, any more than you or I can survive with less air.

If we limit these resources, we don’t only threaten our industries, but life itself.

Humans, animals and plants that use air and water are in many cases are not the cause of pollution. It is how resources are used that can cause pollution and challenge environmental sustainability. A general tax and ETS charge will not only penalise those who pollute, but also those who do their level best to be sustainable and environmentally friendly. Making it more expensive to live will only result in higher taxes and not flow through to environmental outcomes.

Of course, I’m exaggerating; an air tax is a crazy notion. But so is a water tax. Both are plentiful in New Zealand and, with the right incentives – rather than penalties, taxes and ETS charges - good and sustainable environmental outcomes can be achieved. We should use the carrot, not the stick, to make our practices more sustainable.

The reasoning behind these taxes proposed by the TWG, is that making it more expensive to use resources will, magically, result in less resources being used, and somehow that will have positive environmental outcomes. 

Simply put, depending on where the plants are grown, there may not be a need to use much water due to higher rainfall. But in areas with less rainfall, there will be a need to use more water, and that will result in a greater amount of tax being paid. This is neither fair nor equitable; both values our Government claims to champion.

As climate change takes greater effect, more of New Zealand will be drier, and there will be a greater need for water storage and irrigation just to grow the food for New Zealand. Taxing growers for feeding New Zealand healthy food does not seem a logical choice, and could easily result in less healthy food being grown.

Let’s not suffocate ourselves with taxes.

- Mike Chapman, CEO