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Green tax plan to target gas, help poor

The Green Party wants higher taxes on petrol and diesel...

The Green Party wants higher taxes on petrol and diesel, and would use the revenue to make all income up to about $7000 tax free.

Green co-leader Jeanette Fitzsimons said the plan, outlined in a submission to the Government's tax review, would be the first step in a general switch from taxing "goods" to taxing "bads."

"We can benefit the economy, social justice and the environment all at once if we shift tax off things you want to encourage, like work, to things you want to discourage, like waste and pollution," she said.

The Greens' approach was gradualist, because its plans had not been well understood.

"People have talked about an eco-tax without pointing out it is a tax shift, and the public is never in favour of new taxes."

The first aim was to lift the amount collected from so-called environment taxes from 3.5 per cent of revenue - roughly $1.6 billion - to 7 per cent over four years.

The Greens estimate that would allow all earnings up to $7000 - including most single benefits - to be tax-free.

The low paid would need the cash boost because extra transport taxes would hit the poor hardest.

The best way to achieve the trade-off had not been settled.

Ms Fitzsimons said a flat rebate to all taxpayers - even if people on very low incomes got a net tax credit - might be better than a fixed threshold because those at or above a threshold gained more than those on lower incomes.

The Greens also want environmental taxes broadened, with a carbon tax the next priority.

The tax review, due to release an issues paper soon, will look at carbon taxes. Ecological taxes were not specifically included in its brief.

Labour and the Alliance will use the review when setting tax policy for the 2002 election. On current polling, the Greens are in line to have a strong influence in a centre-left government.

The Greens said tax on waste, fisheries resource rentals, toxics including pesticides, hazardous wastes and minerals should be part of a longer-term tax strategy.

A capital gains tax also needed to be looked at.

They favoured a so-called Tobin tax on international capital flows and a border levy of $20 on each visitor arrival.

Ms Fitzsimons said the need for across-the-board tariffs had waned because the weak dollar had helped to correct the current account deficit.

They should be imposed if there was a significant rise in the dollar.

She said the Greens favoured selective tariffs on goods produced under labour or environmental conditions unacceptable in New Zealand, although WTO rules presented a problem in that regard.

Eco-taxes were likely to have a neutral impact on the economy and would be tax neutral for businesses except resource intensive ones, the Greens' submission claimed.