Changes to tax should support dairy sector

Following last week’s Tax Working Group (TWG) announcement, DairyNZ says changes to the tax system should be considered alongside other potential changes for farmers.

DairyNZ will be looking closely at the TWG report and its implications for farmers.

Chief executive Tim Mackle says DairyNZ has strong concerns of a system that looks likely to have significant implications for farmers across a broad range of areas from business asset valuations, administrative costs, succession planning and retirement schemes. 

“Any changes to the tax system should better support the productive sector and recognise other proposals which are going to impact farmers too,” said Mackle. 

“Just like the government, we will analyse the report to fully understand the impacts the proposals would have on the dairy sector. Farmers already pay a disproportionate amount of tax through rates, compared to other modes of production.”

Farmers are facing a number of potential environmental and financial pressures, which has seen many invest heavily in the environmental sustainability of their farm businesses.

“If an environmental tax was also introduced, it is likely those farmers who are motivated to invest in improving environmental performance will have resource diverted,” said Mackle.

“For example, if a farmer had a spare $20,000 per year to invest, this money could be spent planting a 2km riparian strip of 3m wide with native plants. This activity would contribute considerably more to improving water quality and mitigating emissions, than an additional tax.

“So, while we support the working group’s intention to develop a set of long-term goals to help guide New Zealand to a more sustainable economy, incentivising behaviour change will have more impact than penalising farmers.”

DairyNZ agrees there is a need to encourage farmers to mitigate their greenhouse gas emissions, and influence land use and intensity decisions.

“Greenhouse gases are already taxed through the Emissions Trading Scheme. If agriculture enters the scheme, we support the revenue raised being reinvested into the development of low emission technologies, mitigation options that support farmers to improve the sustainability and profitability of their businesses.”

Mackle says DairyNZ shares the need to accelerate the good environmental work already underway in many parts of the country.

“We are focused on ensuring the dairy sector achieves a balance between being competitive and profitable, while also meeting the expectations of our customers and communities.”