How taxes can help the environment

Our tax system has many strengths.

But the Tax Working Group thinks it could do more to help the environment.

New Zealand faces some serious challenges:

We’re losing our biodiversity, our rivers and lakes are under pressure, and big changes are needed to combat climate change.

There are different ways we can tackle these issues. One option is to put a tax on harmful activities, making them more expensive. Another option is to introduce rules and regulations or the Government could just ban certain activities altogether.

The Group has come up with a framework for deciding when tax is helpful.

Based on this, the Group thinks New Zealand could do more with taxes to address waste disposal and traffic congestion while also strengthening the Emissions Trading Scheme.

New environmental taxes could generate more tax revenue for the Government. The Group thinks the Government should spend that money on making our economy more environmentally sustainable.

Looking further ahead, environmental taxes could grow to form a greater chunk of the overall tax mix.

Check out Chapter 4 of the Final Report at taxworkinggroup.govt.nz to read more about the Group’s decision-making framework for environmental taxes. It’s important for New Zealand that we get this right.