The Green Party carbon tax plan announced at the weekend had
hidden traps for households who were promised they would be
better off under the plan, Polson Higgs tax partner Michael
Turner said yesterday.
At the party conference on Sunday, Green co-leader Russel
Norman said the Greens would phase out the Emissions Trading
Scheme and introduce a charge on carbon returned to all
households as a climate tax cut on the first $2000 of income.
The Greens had previously been strong supporters of the ETS
but were now calling the scheme ''National's failed emissions
trading scheme'', despite staunchly defending it in the past.
Mr Turner said a climate tax cut, while having a nice ring to
it, seemed to be an indirect way of reducing the tax burden
''Unfortunately, this would appear to be giving with one hand
and take with the other policy.
''While households will receive a tax break, they presumably
will face higher costs, due to polluters passing on the new
charge in the cost of the goods and services.''
The Green plan showed New Zealand households would be $319
better off every year under the policy.
However, Mr Turner said the policy ignored higher charges to
businesses leading to price rises for things like power,
freight and cartage - all items households used and bought.
The 1% reduction in the company tax rate was likely to be a
point of debate.
While a drop in the company tax rate helped companies, by
leaving more after-tax profit for reinvestment - when those
companies distributed profits - a lower company tax rate
helped non-residents shareholders because New Zealand
residents continued to pay tax at their marginal rates.
''Accordingly, the Greens must hope the reinvestment is
designed to offset the charge on polluters. In all, this
looks a lot like Robin Hood reinventing himself - taxing
businesses more through the carbon tax and farming it back to
households through a tax cut,'' Mr Turner said.
University of Otago political scientist Bryce Edwards said
the new climate change switch positioned the Greens well for
the upcoming election.
''By moving just a little bit more towards the centre, and by
reinforcing their growing reputation for pragmatism and
mainstream credibility, the Greens are well placed to
differentiate themselves from a more crowded electorate
market to the left.''
The Greens were also just as capable of making pragmatic
U-turns as any other political party, he said.
The party had defended the ETS, even while others pointed out
the problems and shortcomings of the scheme.
''In a brazen U-turn, the party is now making strong
criticisms of it and campaigning on replacing it with a
The fact the Greens were suddenly focused on climate change
again was also something of a turnaround, Dr Edwards said.
At the last election, the Greens hardly mentioned the issue,
instead focusing on ''jobs, rivers, kids''.
This time it appeared climate change was to be the main
• A goal of net carbon neutrality by 2050
• Establishment of an independent Climate Commission
• Phasing out of Emissions Trading Scheme
• Initial price on carbon of $25 a tonne on CO2 for all
sectors except agriculture. Dairy emissions will pay $12.50
per tonne and forestry will be credited at $12.50 a tonne.
• First $2000 of income will be tax free and a 1% company tax