bj – you should try spending several weeks of completely unproductive time (or were paying sdmeone elses wages for several weeks for ZERO productivity), doing gst returns (on a regular basis).

Then think about massively complicating that work, making it take many times longer, (but not to necessarily get any more tax) and all you have is totally needless inefficiency.

Variable GST is truely is one of the worst ideas I’ve ever heard.

We are a small business, and ALREADY have some payments where it has cost us MORE to account for the gst, than the gst amount.

Simple GST works. Complicated GST (i.e. like the silly idea of taking gst off food) would be a disaster.

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bj – yes – pricing carbon will be a factor for companies, but that doesn’t actually mean things will change, or that they’ll move in the direction you want.

It may be cheaper to manufacture (say milk powder)in old polluting plant AND pay for carbon, than the added cost of a new $200 million drier (which will probably have to pay nearly as much as the old plant anyway).

Just like on a consummer level, even with carbon priced in, it may still be much cheaper to run your old V8, than to buy a Prius and save on emission tax.

In fact with the price of old large engined cars plummeting, it’s never been CHEAPER to run them.

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A consumption/services tax.. abating to various levels per required (behavioral) outcomes.. eg (illustrative only) fossil fuels at the pump 15 percent, food at retail, 5 percent..

I believe that was the original suggestion. No?

I happen to know that this is done in Sweden and in the US it is a tad more bizarre, as the sales tax (equivalent to gst) can be imposed by State, County and City. With each applying a different rate and to different items. The taxes are additive. I have no idea why you think associating a different tax with a product or product category is so hard. It is done all the time. Just not something you’re used to seeing I guess.

Note that I’m not disagreeing necessarily, about the rest of your post. A high tariff on petrol and/or diesel would be fairly effective at reducing THOSE emissions, but I don’t know what problem we were trying to solve on this branch of the thread.

Put a price on carbon and you automatically get all of the complications involved in trying to work out the balance of efficiencies. The tariff does have the advantage of being easily applied and computed, but we invariably knocked back when such things are required… and who knows, we might come up with some way of doing things that burns something else that is worse but not covered. Coal fired steam cars come to mind.

Of course you realise what will happen with an emission trading scheme? Countries like NZ will get screwed. Criminals and corrupt officials from other countries only need a piece of paper saying that such and such company has so many million credits.

I don’t think that that is going to be a common outcome. More likely to see the same credits sold multiple times – but what choice were WE given Photonz? We said tax. LabNats said “No way”.

The SIMPLE ways were blocked, I think partly because the wealthy and powerful people who control this planet demand their cut and refuse to relinquish their power. The other part is ideological blindness on the part of National.

At this point I say GIVE it to them and deal with them later, because they can block action until the water really starts to rise and if that is allowed to happen it won’t matter if we finally throw them to the sharks.

We have something that looks like a workable ETS and National wants to transform it into a completely unworkable version. I am not tempted to abandon a workable ETS on the possibility that I might persuade this government to actually add taxes to anything.

I wasn’t born yesterday mate, and it’d be stupid to trust this government further than I can throw Mt Ruapehu.

respectfully
BJ

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bj – if you are taking your grocery bill (say for a restaurant) and there are different gst rates on different products, how do you suggest this receipt automatically sorts itself out and magically makes it’s way onto your computer??????? With one rate its a single entry, but with multiple rates you have to add up every individual item from every different rate and sort it into it’s correct place – it’s totally daft.

Clearly you missed what I suggested earlier.

Hit the MAIN problems, with tarrifs that don’t mean setting up a completely new double taxation system, or daft multiple gst rates, or any other stupid system where a massive amount of effort goes into the collection, administration, measurment, govt dept, etc, which makes everyone LESS efficient when the goal is to make everyone MORE efficient.

Hence, simply up the tarrifs on petrol – not a single dollar of extra administration cost for any person or company. It’s the same administration costs as now, affecting no more than half a dozen companies, but with a higher rate.

Similarly put a tarrif on thermal generation, which just a handful of companies would have to administer, or thak that back another step and put the tarrifs on coal. Again, it only affects a few companies at source.

And you could take other regulations ALREADY in place, like emission levels for factories, and gradually tighten them.

Of course you realise what will happen with an emission trading scheme? Countries like NZ will get screwed. Criminals and corrupt officials from other countries only need a piece of paper saying that such and such company has so many million credits. For nothing more than a piece of paper (authenticated by the corrupt official) they can get millions of dollars from companes in other countries.

I can see this being the world biggest scam – organised crime and corrupt officials will be laughing all the way to the bank with this one. What’s easier than falsely documenting carbon credits and selling them for millions.

Care to take a bet on when the first story will appear about a myriad of false carbon credits?

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The notion that things have different GST rates is not greatly different from having some on GST and some not, and that’s been the case in the USA for 30 years. Would you do it by hand? I dunno… do they total up your family grocery bill by hand. ?

Different things have different GST rates in at least one other country I am aware of, and that is Sweden.

respectfully
BJ

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Photonz

What I argued for is that the company does what makes sense to do when the price of carbon is included. When it is, the company will discover what you seem to have forgotten about the economics of the situation. Which is that the break-even point for use of the more expensive kit has changed. The economics will be different, but the efficient hardware will pay for itself much faster with CO2 included, so the investment may well still be made… or we all suffer with more expensive milk until someone else invests in new plant.

I know you guys pride yourselves on being good economists. What you can’t seem to get is that making it all happen by using the economic lever of CO2 works, but works differently from whatever it is you aren’t suggesting…. and I am still waiting on that.

respectfully
BJ

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tomfarmer – clearly you’re not someone who spends many weeks every year doing gst.

It’s blatantly obvious that if you’ve got a whole list of items on the one invoice with lots of different gst rates, then BEFORE you can put that in a spreadheet, you FIRST have to manually indiviualise every item.

What was a 30 second input suddenly takes 20 or a hundred times longer.

Pricing items in shops would be a nightmare – imagine the shop junior trying to work out various percentages on all sorts of different products, and trying to work out which ones were in which category.

Face it tomfarmer – it’s a really stupid idea.

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different levels of gst would be a total nightmare for business.

Instead of totaling your expenses to work out gst, you’d have to sort thousands of expenses into different levels of gst. Many receipts would have items with different leves of gst on the one receipt.Frankly, photo, this is nonsense aka trivialization for the sake of argument.You’ll be aware of spreadsheets and amending legislation.. of course you will. Polemics elsewhere. Let’s keep to simple ways and means in all important matters.

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Photonz “Without prosperity, they would be stuck with old much less efficient milk driers.”……
bj…. “…and the milk would cost more because there would be a price to pay for that, and people would buy less because it would cost more.”

That’s amazing bj – you just argued in favour of old inefficent coal powered technology that emits vastly more carbon. That’s really twisted logic.

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photonz says: survival becomes the first priority, and issues like environment drop way down the list.

Until it reappears at the top of the list and won’t be shaken from that position – then you’re screwed. My guess is that you don’t see that as the present situation, where many here do.

As for Fonterra’s new efficiency – they’re still digging up crappy coal and burning it, no matter how much improved that might be on their past performance – certainly not improved enough to be regarded as clean.

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bj – you say “The entire point to this process is that the ecology comes first.”

In the ideal world mayube, but back in the real world, many people do not have the disposible income to make many choices. For instance how many people pay $20 for a free range chicken when they can buy a standard one for $7.

How many people spend $50,000 on a hybrid Toyota Prius when you can buy a similar sized new car for half that? It’s way out of reach of the average person.

Often making the “right” and usually more expenensive choices, requires a higher disposible income than many people have. Yes we can all do our bit, but

Of course it’s about companies having profits to make choices. It’s little different to a household – a company doing well has a wide choice of what to spend it’s profit on.

For example Fonterras new milk drying plant that Greenpeace protested yesterday. It’s 30% more efficient than the old driers – the most efficient milk drier in the world – it cleaverly uses the steam from the drying milk to generate 25% of the plants electricity, and it cuts a massive 90% of the number of shipping trips compared to liquid milk. However it cost $200 million. Massive effciency gains made by a company with money to spend and choices to make.

Without prosperity, they would be stuck with old much less efficient milk driers.

With low or no profits, there’s no new money to spend on anything – survival becomes the first priority, and issues like environment drop way down the list.

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tomfarmeer – different levels of gst would be a total nightmare for business.

Instead of totaling your expenses to work out gst, you’d have to sort thousands of expenses into different levels of gst. Many receipts would have items with different leves of gst on the one receipt.

We’re a small business (just 2 and a half workers). It already costs us well into five figures per year to do our accounts for tax and gst, not to mention a few thousand more for the accountant.

If you want a really simple system, you could start by just taxing a small number of the largest emission types. i.e.
- added petrol tax, as this would cost nothing extra to collect – it’s just half a dozen companies who need to change the current tax rate.
- perhaps a tax at source for thermally genratated power

However simply taxing to try change habits may not work in some cases. What say we can buy “high carbon milk” including emission taxes for $3 per litre, and “new improved low carbon milk” which costs much more to produce and retails at $4 per litre. Which one will people buy? (that’s where the prosperity arguement comes in again, just like with free range eggs, chicken, pork etc)

And that brings up the issue of whether the system will backfire in many cases. What happens to the companies and industries who need the most help to research and develop new techniology to reduce their emissions?

Will they get the help they need, or will they be penalised and suffer lower sales, and be less able than ever to change.

Emissions trading will very likely do the most harm to those companies who need the most help.

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BJchip,

A simple approach.. for that behavior changing strategy you suggest.. on and off I’ve thought about it for years.. the other day finding someone else capable of stating it.. into a tax-averse corporate-controlled or, if you will, ideologically constructed economy..

A consumption/services tax.. abating to various levels per required (behavioral) outcomes.. eg (illustrative only) fossil fuels at the pump 15 percent, food at retail, 5 percent..

GST could – according to a commenter elsewhere (‘slarty’ I think the name was) – serve as vehicle for this kind of thing..

I’d welcome your view..

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You’re right – properity is not the object of the game, however without it, you face an uphill battle.

With prosperity, companies don’t have as many choices of what direction to head in, nor do they have the spare money to spend on environmental issues.

Without prosperity, there are less choices available, less money available, and frankly – much less concern about the environment.

The environment is something most people worry about AFTER they have their basic needs met. If the economy is in bad shape, environmental issues will ALWAYS drop in priority.

And for most people it will never be the top priority. You have to convince people in Invercargill that their city being warmer in 50 years time is a really bad thing.

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Photonz

A. You misunderstand. Something has to work to change behavior because behavior IS changeable. In this statement I am asserting only that there is a set of circumstances that will serve the purpose of causing change… and I am quite sure that it actually will at some Carbon price (subject to b below).

B. I have never seen a scheme of this nature that did not include tariffs on the non-participant’s goods. I doubt that I will see one in my lifetime.

C. I do not think that we can go backwards from where we are now. National is in government. I cannot imagine anything more backward than that…. possibly because I cannot imagine Rodney Hide as PM. Faulty imagination I guess.

After paying for the cost of the scheme, measuring and monitoring and auditing we will have spent more MONEY on it than we save in CO2 credits or foregone tariffs…. but as the price rises we will of a certainty be using less Carbon…. that is, if National can be prevented from forcing it all on the taxpayer’s back and cutting off the market signal it is certain.

I dismiss efficiency in terms of money and person-hours, but not in terms of actually building things or supplying goods. THAT will be increased because the CO2 signal demands it… because the invisible hand will finally be able to feel the heat.

Prosperity is NOT the object of the exercise. CO2 emissions are. That’s where we are at cross purposes here. Not efficiency in terms of money, but in terms of actual work required to keep the country running. We personally will have to have the odd can of franks and beans. We had wanted it all as a tax, but we will take it as it comes.

If the country wants to become “more prosperous” it isn’t going to do so through the ETS. Trying to subvert the ETS to that purpose destroys it. The cause of prosperity would be better served by stuffing regulations down the financial sector’s throat, removing the tax incentives around housing and adopting a Tobin tax and/or wiping out the Fractional-Reserve system entirely and making the NZ dollar redeemable, backed by an amount of NZ KWH in NZ. The removal of the Fractional Reserve removes the imperative of continual exponential growth and with the shift to a redeemable dollar it would collapse the global economic house-of-cards in 3 to 6 weeks. Paradigm shift.

Prosperity doesn’t come from this. Survival comes from this.

Prosperity comes after survival.

Bush was never as dumb as he seemed (nobody with human parents could be), but he was wrong about the WAY he relied on Technology. Technology is more likely to save us than any deal we humans can reach (we are horribly bad at making such agreements and keeping them at the international level), but it is not going to reduce our CO2 emissions well or quickly. Until the real problems of the CO2 are so obvious that the deniers are buried, just as the Tobacco lobby was finally buried, in reality and in lawsuits that pulled its teeth, they won’t stop.

The problem is that by the time that happens, recovery through reduction of emissions will be impossible. It will be literally impossible, even if we turned off every single machine, to cause the climate to recover to anything like the conditions under which we evolved.

So we will have to have, ready to hand, technical means to alter the solar input even as we tackle the reductions of emissions and the increases in efficiency and controls over our consumption that all have to come in order to get the Carbon back into the ground. Nothing else will serve. We have to have enough control to stop the warming. Which is technical yes, but not a reduction in emissions. THAT has to come from us putting a price on them. Nothing else will serve.

respectfully
BJ

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BJ – just because is HAS to work, doesn’t mean it WILL work. If prices get very high, that will definitely change bahaviour, but some of that change might be buying from companies in places that are not signed up to the scheme (i.e Australian agriculture chosen over NZ agriculture – effectively that would probably INCREASE emissions).

You say we don’t want to get back to the point we are at now. What I’m saying, is that after paying for the cost of the scheme, new govt departments, administration, measuring, monitoring, auditing, and paying, all this inefficiency will take us BACKWARDS – where we are now might be an aspirational aim in five years time.

You dismiss efficiency, yet surely this is the key to everything. If we become inefficient though a bureaucratic second tax system, we have to produce MORE to get the same income we had before.

I hate to say it, but George Bush may have been right about climate change (the only thing he was right about?) when he said that technology will have a far greater effect on reducing emissions than regulation.

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Fair enough Photonz, I did do something rude and I apologize. You only said it would not work as intended.

The problem however, is that it HAS to be made to work… and when the price gets high enough it will make a difference, because we do not want to get back to the point we are at now, with no price signal when we destroy the irreplaceable. Efficient or not, we have to put the price on it.

You tell me another way to do it. WE asked for a carbon tax… which would have been simpler all around. Now we have to put up with a market.

respectfully
BJ

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BJ – Why do you make false quotes then attibute them to me?

Making what is effectively a whole new duplicate tax system with masses of additional bureauracy and compliances for the world, will make every company and country LESS efficient than it already is. The inefficiencies of complying to the new system, the payments, research, measurements, administration, new govt departments etc, all has to be overcome just to get back to the point where we are now.

Being much less efficient means there is less money to spend on changing the actual problem.

I never said it won’t work. What I’m saying is it won’t work as intended, it won’t make the big differences people are hoping for, and there will be many cases where it will have the OPPOSITE effect of what was intended.

A massive amount of the revenue collected and costs will go on the system, instead of towards the problem.

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