Let’s call the Business Roundtable’s bluff on a carbon tax

The New Zealand Business Roundtable (NZBR) is opposed to a greenhouse gas emissions trading scheme for Aotearoa (as reported here). I agree with them. As I have written on Wellsharp before, the ETS idea is flawed on a number of levels.
 
In its place, the NZBR proposes a carbon tax. However, while idea of a carbon tax has its merits in principle, the NZBR’s framing of it has several very dubious implications.


 Firstly, I doubt the NZBR’s motivation is entirely altruistic, given their calls for more delays, more committees and more reports. It seems that some people will have to wait until the tide laps up against the door before they believe that substantive action on climate change is needed. Climate change is a global scale long term problem – not something that can be easily fixed at some vague “later date” after yet another round of proposals and consultations. Decisive action is needed so that businesses internalise the cost of their greenhouse gas emissions and individuals reduce their carbon footprints now.
 
I’m also fascinated by the curious sight of the NZBR, the hearth and home of neoliberal economics in New Zealand, advocating a new tax. They are, unsurprisingly, advocating for the tax rate to be set low, and I’m sure they feel that with a National (neoliberal conservative) government in place they can keep the levers of fiscal policy in ‘safe hands’. But if the tax is set low, how will it possibly have a significant effect on patterns of energy consumption? What’s the point of a carbon tax that will actually make no measureable difference?
 
The NZBR’s real motivation for a carbon tax might well be found in its advice that a carbon tax be accompanied by income tax cuts. The NZBR strongly opposes progressive forms of taxation (see this NZBR article for its argument that progressive taxation is “inherently arbitrary and unfair”). So, again given the government we have in place right now in New Zealand, we know exactly who the NZBR would expect to benefit from those tax cuts – the wealthy. A tax imposed on the price of carbon in this manner might well send an appropriate signal to consumers but, without an equitable structuring of the tax regime, consumers will send a signal right back to the State, and it won’t be a polite one.

Shifting more of the tax burden onto the poor and away from the wealthy, as the NZBR’s proposal hints at, is a deeply unjust way to address climate change and it must be resisted.
 
However, as noted by the New Scientist writer Michael Le Page, the question of the popularity of a carbon tax can be resolved very easily and very neatly through climate scientist James Hansen’s suggestion of a carbon tax + 100% dividend. The idea is that carbon is taxed at its extractive source or upon import into the country and these tax receipts are returned equally to every citizen (with half-shares for children) through a regular monthly dividend payment. And just to emphasise, that’s not just every taxpayer who benefits, its every citizen.
 
I’m not totally convinced about a carbon tax – the inordinately wealthy of this world may find it easy to maintain high consumption lifestyles in the face of a tax, and more direct regulation of emissions may be necessary. But the carbon tax/dividend idea means that everyone is encouraged to reduce their carbon footprint and lowest income citizens could potentially benefit the most.

So let’s call the NZBR’s bluff on their carbon tax proposal and say, yes, that idea of a carbon tax – along with a 100% dividend – is well worth trying, thanks for your support and encouragement.

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