Tanczos Nandor: Income Tax Bill — Second Reading 
Tanczos Nandor: Income Tax Bill — Second Reading 
[Volume:641;Page:11230] 
NANDOR TANCZOS (Green) 
: 
 I rise to speak on the second reading of the Income Tax Bill and to say simply that the Green Party supports this bill. We think that it is a good initiative for what it is worth. The attempt to simplify tax legislation and to make it more accessible is something that should be commended for all the various reasons members have already stated. 
However I also have to say that like the Maori Party and the National Party we think it is a shame that the effort that went into this is not reflected in any effort to address the broader issues although there is some disagreement about what those broader issues might be. In particular of course the thing that interests the Green Party is opportunity for ecological tax reform. I recognise that that was not the brief of this project. Nevertheless I cannot avoid asking why the Government consistently refuses to take up opportunities to address questions of tax shifting—that is ecological tax reform. It was avoided in the business tax review; it was avoided of course in this rewrite. 
The Government position has been basically dismissive of the idea of ecological tax reform. What do I mean by that? I will dwell on this for a couple of moments. I give thanks to Dr Suzi Kerr at the Motu Economic and Public Policy Research Unit for her 2001 paper on ecological tax reform because she has put the ideas out fairly clearly. I will draw on her work and the work of some other people as well. 
First of all I think we have to recognise that taxes on labour income and on capital cause inefficient distortions in behaviour. Nevertheless we accept that in order to address broader social environmental and other goals. However if the Government can raise money with no additional distortion—for example by using eco taxes to address environmental problems rather than using other non-revenue raising forms of environmental regulation—we can achieve significant efficiency gains. The revenue raised can be used to decrease other forms of taxation or to reduce Government debt. The Green policy has been consistent on this over a number of years—that we are about shifting taxation not about increasing it by way of ecological tax reform. 
If we can reduce labour taxes without reducing the overall amount the Government has available to spend the economy as a whole will benefit. It is worth noting that even unlikely supporters such as the UK shadow Chancellor and  
The Economist  
magazine have become advocates for ecological tax reform. The Greens have long been supporters of fiscally neutral ecological tax shifting from incomes on to pollution and resource use. We are very pleased to see those ideas being picked up by more conservative elements. 
Ecological taxes are pigovian taxes aimed at addressing an externality that causes inefficiency in the form of too much pollution. Under current tax law those responsible for pollution do not have to take responsibility for the social and environmental costs that they impose. So we need a system that rewards behaviour that looks after the environment and disincentivises behaviour that destroys the environment. If a tax is set appropriately so that the marginal cost of reducing the pollution is equal to the marginal environmental benefit it will equalise the marginal costs of abatement across all actors and it can achieve the environmental goal of reduced pollution at the least cost. Eco taxes simply price the environmental damage in the same way that other inputs to production and distribution are priced leading to efficient use of that input. 
That is why the Green Party supports things like lower registration fees for cars that are fuel efficient and higher registration fees for cars that use more fuel. That is why my Waste Minimisation Bill currently before the Local Government and Environment Committee puts a levy on waste going to landfill; the levy can then be used to fund waste minimisation efforts. As the New Zealand Business Council for Sustainable Development has stated in support of at least elements of that bill a waste levy is simply about internalising externalities. 
The cost created by this approach is the lowest possible cost of achieving environmental gain assuming there are no problems with people having information about abatement opportunities or access to capital to implement that. We recognise that it is not a perfect world and that those issues do arise. Nevertheless any other regulatory programme will have at least as great a cost on average in order to reduce the same amount of emissions although some goods may face higher costs and some may face lower costs. But that is part of the reality of pricing externalities. 
We welcome the support of  
The 
Economist  
magazine for these kinds of ideas. It has now come out and said that countries should adopt a carbon charge because that is one of the most efficient and stable ways of putting a price on carbon emissions. Dr Kerr in her paper states that in the case of carbon taxes in the United States using the revenue from carbon regulation to cut other taxes is estimated to reduce the cost of the regulations by two-thirds. We also welcome the comments of the UK shadow Chancellor George Osborne that we need to move tax on to environmentally damaging behaviour and off incomes. That is exactly the point that the Green Party has been trying to make for many many years. It is about tax shifting in order to internalise externalities and to address the reality that we are starting to reach the environmental limits of human activity. We have to start to not just tinker around the edges with environmental policy but to put ecological issues at the centre of economic life. And ecological tax reform is certainly one key way if not the only way of doing that. 
We support this bill. We recognise that it is not intended to be a review of tax law but a codification and clarification. That is important and we support that. However we do ask the Government please to stop running from this issue. The time to start to address issues of ecological tax reform is now. 
Bill read a second time.