Crowe Horwath: Influencing taxation policy

Crowe Horwath's Sean Bennett discusses environmental tax. Photo / 123RF

Urban or rural, good, bad or neutral, we have all played a part to get New Zealand's environmental footprint where it is today.

Submissions to the Tax Working Group showed New Zealanders are divided about the role of tax in environmental and ecological challenges. Some are advocating for environmental taxes while others question whether it's the right instrument.

For agriculture, environmental taxes could be centred on nitrogen losses and greenhouse gases based on the Overseer reports.

The primary sector advocates that nitrogen loss is not the same as degrading the environment, yet the two have been lumped together for tax purposes.

Businesses operating within their nitrogen allocation could be taxed for being compliant, questionable logic bordering on negligence.

With nearly half of New Zealand's greenhouse gas emissions coming from agriculture the group wants to influence behaviour in agricultural by bringing it into the Emissions Trading Scheme. It is concerning that the group sees Overseer as a tool which is "at the precise end of the spectrum," despite criticism of its accuracy.

And the tax revenue potential? A 5 per cent charge on agriculture emissions. For farm businesses deemed carbon neutral, potentially there could be no tax relief.

Strong industry leadership and advocacy by farm businesses will be needed to ensure any proposed environmental taxes imposed on agriculture are done using evidenced scientific work rather than a model with known inaccuracies.

One option for farm businesses is to do nothing.

Other options are to advocate, influence policy, and challenge industry leaders to put their best foot forward for the agricultural sector.

This information is general in nature and readers should seek specialist advice before making financial decisions.