Tradeable water rights, not a tax

Stuff reports:

Options being investigated by the Government for a tax or royalty on bottled include a charge on water sold in New Zealand and overseas, possibly of one or two cents a litre.
The issue of water exports blew up before the last election, and a large protest in Christchurch on Saturday shows it is still a matter of concern for many people. In the Christchurch protest at least 2000 people showed their opposition to a company shipping billions of litres of water overseas.
On Monday, Trade and Export Growth Minister David Parker said water bottling companies should be paying something.

Apart from company tax and GST?

There should be charges for water, but not just on bottled water exports which is selective stupidity.

The best market mechanism for water is regional tradeable rights. Overall there is no shortage of water in NZ. We have 500 trillion litres of water a year, of which only 2% is extracted.

But in some areas of New Zealand there can be greater demand for water than there is supply. In those areas it makes sense to have some sort of charge for water. But rather than a tax, tradeable rights would be best as it would have a flexible price.

So a flat tax all over New Zealand on just one use of extracted water is a very bad way to do things. Sadly probably what the Government will do.

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