Labour’s tax on bottled water will only bring in $20,000 p.a. at best

David Farrar has has someone email him with some calculations for Labour’s tax on bottled water:

Yesterday on Morning Report ( go to http://www.radionz.co.nz/national/programmes/morningreport/audio/201859010/ardern-responds-after-farmers-protest-in-home-town ) when being interviewed by Guyon Espiner,  Jacinda Ardern stated (just after 2 minutes 30 seconds and again at 9 minutes 20 second) that the tax would be ten times that  proposed for  water abstracted for irrigation. That irrigation rate is between 1 and 2 cents per tonne.

So now we know what the bottled water tax will be – between 10 and 20 cents per tonne.

This will raise negligible quantities of tax; so little in fact that it wouldn’t be worth collecting.

Here are the sums:

According to a Coriolis  report for MBIE  go to http://www.mbie.govt.nz/info-services/sectors-industries/food-beverage/documents-image-library/folder-2017-investors-guides/investors-guide-to-the-new-zealand-beverages-industry-2017.pdf  the exports of bottled water in 2015 were valued at $7 million and the average price per litre was $0.61, giving a sales volume of 11.47 million litres.

Supermarket sales of bottled water sales over the past year were 37 million litres. I do not have the figures for bottled water sales from other outlets such as dairies, self service dispensers and petrol stations etc, but assuming  that these were half of total domestic sales, that would add another 37 million litres of bottled water sales.

Adding domestic and exported bottled water sales together gives us total sales of 85.47 million litres.

That is 85,470 tonnes of water. At between 10 and 20 cents per tonne total revenue collected would be between $8547 and $17094 per annum.

That would not even cover the cost of superannuation for one retired couple for one year. Even if my assumptions on volumes sold domestically through outlets other than supermarkets were only half actual annual sales,  the revenue collected would still be negligible.

I pointed out months ago how pathetic a tax on bottled water would be, that the candle wasn’t worth the wick. It would cost more to administer it than it would raise.

But this just shows how inept they are with their policy making. Basically they are just making policy on the basis of how it sounds. A few hours, days or weeks later the policy falls to bits once experts grapple with the lack of information.

As Farrar points out this allows Labour to fund one more married pensioner couple.

So Labour’s tax on bottled water will bring in enough revenue to pay for one extra couple on superannuation!! In fact it won’t even do that as the extra public servants needed to administer the bottled water tax will cost more than the tax brings in.

It was a daft idea, and now Labour has ensured it will never fly because they are being mocked mercilessly over it.

Again this gives credence to Steve Joyce’s claims that Labour has a very deep fiscal hole and their numbers don’t make sense.

 

-Kiwiblog

 


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