Earlier today our economist Joe Ascroft submitted in person to the Environment Select Committee on the Zero Carbon Bill. 

The Bill sets out expectations for reducing New Zealand's emissions profile as part of a global effort to limit climate change. 

Joe spoke to our written submission, which is available here. 

Our key contentions to the Committee were that:

1. The economic effects of taxing and limiting emissions are often underplayed by climate activists. NZIER forecasts that real GDP could be between $10.2 and $49 billion smaller by 2050 if we adopt a split-gas approach compared to current emissions targets. Compared to taking no action at all, GDP could be up to 22 percent smaller by 2050.

2. The Ministry for the Environment argues that the economic modelling fails to take into account the impact of climate change on the New Zealand economy, but that critique misses that New Zealand's impact on climate change is likely to be very small. 

3. The poorest households are likely to be disproportionately hurt by any intervention. NZIER modelling indicates the poorest 40 percent are likely to experience six times the harm of the richest 20 percent. 

4. Aggressively targeting our agricultural sector could simply cause production to shift overseas - with no subsequent net impact on global emissions.

The New Zealand Taxpayers’ Union has finalised and presented its submission to the Tax Working Group, along with submissions from more than 800 Taxpayers’ Union members and supporters.
 
We look forward to hearing the Working Group acknowledge not just our own submission, but those of the 800 or so taxpayers who have submitted via our website.
 
The basic message from our supporters is clear: the Tax Working Group should not be used as an opportunity to dig even deeper into taxpayers’ pockets. This theme is reflected in our own submission, which says that any proposals to hike or introduce new taxes should be offset with tax cuts in other areas.
 
A big thank you to all of our supporters who gave us helpful feedback on our Exposure Draft, ensuring our constructive suggestions for the Working Group are comprehensive and of a high standard.
 
Our full submission can be read here, or at the bottom of this page. Key points include:

1. Where new taxes are recommended, we say the Tax Working Group should make them revenue neutral – i.e. balanced with tax cuts in other areas.
 
2. No taxation without indexation: we call for income tax thresholds to be indexed to changes in average earnings or, at minimum inflation (as happens in Canada). This would end fiscal drag (also called 'bracket creep').
 
3. We call for the company tax rate to be cut for all businesses rather than cutting tax rates for smaller businesses (as the Working Group’s Background Paper proposed). Having multiple levels of company tax would create perverse incentives.
 
4. We call for full tax deductibility for businesses’ capital spending within the first year of purchase to increase incentives to invest in capital and productivity, and increase wages.
 
5. The loophole allowing charity-owned businesses (such as those owned by churches and iwi even when none of the profits are used for the 'charitable' purpose) to operate tax-free should be closed.
 
6. Similarly, Māori Authority-owned businesses should operate under the same tax rate as their competitors paying 28% income tax - and not be allowed pay the special 17.5% rate.
 
7. We explain why introducing a complex Australian-style capital gains tax would be a step backwards and bad for investment, growth and employment.
 
8. On retirement investment, we say taxpayers should be allowed to deduct inflation from taxable interest income.