WELLINGTON - The New Zealand government yesterday proposed a tax of up to NZ$25 ($11.17) a tonne of carbon dioxide equivalent to meet targets under the Kyoto climate change agreement.
However, the tax would not be levied before 2007 and only if the Kyoto protocol comes into force in 2008, according to documents released with the NZ government's "preferred policy" on the Kyoto protocol. The 1997 protocol, which the government expects to ratify in August, requires New Zealand and other developed countries to reduce their greenhouse gas emissions by 5.2 percent of 1990 levels between the first commitment period of 2008-12.
New Zealand farmers will be exempt from the tax, which will approximate the global price of carbon estimated internationally to be priced between NZ$10 and NZ$20 a tonne.
Around half of New Zealand's greenhouse gas output comes from the emissions of more than 50 million sheep and cattle, whose products earn around one third of New Zealand's direct export earnings.
Energy Minister Pete Hodgson said that cash raised from the new tax would be reinjected into the New Zealand economy by cutting taxes elsewhere.
"Revenue will not be used to improve the (NZ government's) fiscal position but will be recycled, for example through the tax system," Hodgson said in a statement.
Official papers show that a NZ$25 a tonne tax would raise retail petrol prices by six percent, diesel 12 percent, electricity nine percent, gas eight percent, and coal 19 percent.
Hodgson also said that the government would retain carbon sink credits generated by forests, which absorb greenhouse gases from the atmosphere.
"These credits will be retained and managed by the government at least for the first commitment period, with a portion of the revenue used to provide incentives for the establishment and enhancement of sinks," Hodgson said.
The proposals will now be open for public submission with the government planning to make final decisions by August.:
