“When you look at everything else coming down the pipeline, if I was asked to pick one we were prepared to lose it would be this one, the one we have won,” Federated Farmers vice-president Andrew Hoggard said of the capital gains tax.
Prime Minister Jacinda Ardern also ruled out water and fertiliser taxes as suggested by the Tax Working Group.
The Government has made improved management and quality of fresh water a priority and new policies are likely to follow the release of papers on water quality and climate change, which are likely to include changes to the Emissions Trading Scheme (ETS).
Hoggard fears a revamped ETS will be more damaging than a CGT and new rules for water, aerial cropping, winter grazing and feedlots might have a national perspective while ignoring regional and catchment issues.
The sector will learn on April 30 the likely charge for greenhouse gas emissions when the Interim Committee on Climate Change (ICCC) reports to the Government.
The ICCC is considering annual charges of 1c/kg MS, $4.60/cattle beast, 3c/kg of sheep meat, 43c/sheep, 1c/kg beef and $2.92/tonne of urea.
They will initially be levied on processors from as early as next year to raise awareness among farmers ahead of measuring of emissions at farm level, which is at least five years away.
Dairy and meat processors oppose the tax, saying it will not make any difference to climate change.
The cost of agricultural greenhouse gas emissions is calculated at $1 billion but the Government will allocate the sector units equivalent to 90% of emissions.
It is understood the allocation will be gradually lowered every five years.
Hoggard welcomed the CGT back-down as the Government putting well-reasoned and practical considerations in front of ideology and acknowledging significant administration costs had the potential to put a handbrake on small and medium businesses.
National agriculture spokesman Nathan Guy said “I am pleased the Government caved but we must be mindful of the fact more taxes and regulations are coming.”
He warns Environment Minister David Parker will introduce measures to address water quality, winter grazing, cropping on hill country and feedlots.
Hoggard fears new regulations will ignore recent progress in water quality and methane reduction.
“I hope they look at what has happened in recent times and not focus on 20 years ago.”
A big issue will be what constitutes a feedlot and Hoggard says his farm is a case in point.
During calving his springer mob spends the morning on pasture but afternoons and nights on a sandy, woodlot paddock and is fed supplementary feed.
The area provides shelter, dry footing and prevents pasture damage but could be termed a feedlot.
Equally, his community is working hard to improve the Oroua River in Manawatu, the efforts recently receiving national recognition.
Meat Industry Association chief executive Tim Ritchie says the proposed emissions charge is untargeted and a tax on processors.
“There would be no penalty for farmers who emit more or incentive for farmers to emit less.
“Processors would pay for the number of livestock processed, irrespective of the actual emissions from the farm.”
Ritchie says the tax will distract from and undermine efforts to develop practical on-farm solutions to lower greenhouse gas.
The Dairy Companies Association wants to see details of the proposal before commenting.
