A REAL government would impose a tax on all natural resources of sufficient economic value to make the administration of the tax cost effective. For land owners this would be similar to rates on unimproved value but would be higher. For miners it would be similar to royalties now paid in some cases to the state but again would be higher. Industries using the air, land, rivers or sea as pollution sinks would pay for periodic licences. The goal would be to remove the full value of the services of the undeveloped natural resource so that the value remaining with the title would all be value created by the activities of the owner of the title. The tax would be phased in slowly.

Taxes on profits are not consistent with the REAL party philosophy which includes a belief that people are entitled to the full value of their labour. Business taxes would therefore be phased out but while they remain we expect to be able to make the natural resource tax deductible from any business tax liability. The introduction of the natural resource tax will make it more expensive for people to hang on to natural resources which they are not using efficiently to produce the things other people require. The present system penalises efficient producers more heavily than wasteful owners. As the business tax was diminished the efficient producers would begin to be at an advantage under the natural resource tax which a REAL government would impose.

Environmentalists will find the idea of creating an incentive to produce worrying. The REAL party is very concerned about conservation of threatened ecosystems and species both because of the probable future impact of their loss on humanity and because of a belief that other species have as much right to exist on this planet as we have, whether they have any value to us or not. We do, however, recognise that conservation at present is often supported by the comfortably off and paid for by low income groups, in loss of jobs and perhaps in higher prices of necessities. There would be mechanisms to allow conservation to continue. Conservation land would be set aside in recognition of the rights of other species and would not be taxed. Initially all existing conservation land would be treated in this way. The extent of land set aside in this way would be increased or decreased if there was 95% support for the change in a referendum. If an increase was agreed a study would be commissioned to identify which areas of land would be most advantageously set aside in this way. Land-owners whose land had been identified in this way would be invited to designate their land for conservation. Land so designated would become tax free and in some circumstance might attract grants for appropriate conservation projects. Those who felt the amount of land set aside in this way was insufficient would be encouraged to join together into voluntary organisations which could raise funds from their members or through their activities to buy land and pay the tax on it. This would be calling the bluff of the comfortable environmentalists who would have actually to personally give up something to achieve the conservation they say they value. Forest and Bird might be an organisation who would like to take on this role.

The actual amount of the tax would be set by a market mechanism which would allow the values of all people to be taken into account. The money raised by the tax would be paid out as a Natural Dividend. The Natural Dividend would be paid to everyone in recognition of their equal right to enjoy the benefits of the services of natural resources since natural resources are not created through anyone's labour.

The tax on natural resources will impact more severely on those who have invested in resource rich assets than on those who have invested in assets which have mainly been created by human work. There will be compensation for those affected by this change. There will have to be a period of monitoring after the new taxes are fully introduced to determine the amount of compensation which is appropriate. It is anticipated that compensation will be paid when property is sold or when the owner reaches retiring age. Consultation with banks and landowners will be needed to decide how best to deal with mortgages on properties whose value is changed by these taxes. One possible mechanism would be for there to be government assistance with mortgage payments and some government guarantee to the mortgagee. Payments made in these arrangements would be taken into account in final compensation payments.