The Levy
How much will it cost?
There will be a levy rate of 27c/tonne in the first year and a maximum levy rate for the six year levy term of 30c/tonne.
Each year the Plantation Forestry Work Programme will be reviewed and a budget for the next year approved. The levy struck for that period may be more or less than the previous year’s levy, but it may not exceed the maximum levy amount of 30c/tonne to be fixed by a Levy Order.
Assuming a 30c/tonne maximum levy rate and a typical radiata forest harvested at year 30, the levy will average out at around $5 a hectare a year for each year a forest is growing. This expense is tax deductible.
What will be levied?
The levy will apply to products sourced from trees in a plantation forest. This includes logs, posts, poles, forest waste, binwood, hog fuel and woodchip, exported or processed in New Zealand.
The levy does not apply to bark sold separately, Christmas trees or domestic firewood.
Plantation forest are defined as planted forests and forests that have grown as a result of a planted forest such as wildings and regeneration.
Production from planted native forests will be levied. Production from natural native forests will not be levied.
The levy collection system
The levy will be applied to all harvested wood products. The FGLT will invoice log and other forest product owners and will be responsible for collecting debts and accounting for the funds.
In order to ensure all forest products are fairly and accurately levied, domestic wood processors and export stevedoring/marshalling companies will act as data collection agents. They will be asked (and legally required) to provide volume, weight and log ownership information to the Trust. The Trust has discussed this with representatives of many of these agents and is writing to all those for whom it has addresses. Their co-operation is greatly appreciated.
Under the Commodity Levy Order the forest owner will be solely responsible for paying the levy. Where the forest owner no longer owns the log or other product when it reaches the data collection agent, the owner of the product may pass the levy cost back down the purchasing chain to the forest owner.
A separate company will be formed by an independent third party provider to manage the levy collection system on behalf of the FGLT. To make the task of supplying data as simple as possible, collection agents will be supplied with an automated data collation and transfer system. This will enable data to be transferred electronically, or via a faxed monthly return. Only this company will have access to the data, which will be stored securely. Data identifying the data collector or the levy payer may only be used for levy collection purposes.
Letter to data collection agents >>
| Plant/port location | XYZ Sawmill Ltd, Port Tauranga, etc |
| Commodity owner company name and address | In the case of a port these details will relate to the owner of the commodity after it has passed over the wharf gate |
| Commodity | Log, post, pole, chip, forest waste, binwood, hogged material |
| Amount (m3 or tonnes, bdu)* | A m3 = a tonne, regardless of measurement type. The levy for woodchip applies to green tonnes |
| Date range | Data will be supplied monthly – applicable month required |
| Species | Radiata, Douglas-fir, Eucalypt, Cupressus or other |
*It is expected the majority of product will be reported in tonnes. If a transaction is in cubic metres then 1:1 will be the conversion factor regardless of whether it was a 2D, 3D or JAS m3. For more details, refer to the letter to data collection agents (above).
What happens after six years?
At the end of the 2019 financial year the levy arrangement will come to the end of its six year term. If forest growers want to continue to fund work on behalf of the industry with a levy struck under the Commodity Levies Act for a further six years, there must be a majority yes vote in another referendum.
What will the levy be used for?
More than half of the money raised by the levy will be used to fund the research priorities outlined in the NZ Forestry Science and Innovation Plan. In the first year of the levy, the budget for this will be around $3 million.
The balance of the levy will be used to fund activities defined in the Plantation Forestry Work Plan 2013-2019.
Interim funding of research
At present, grower-funded research is channelled through several grower collectives, each funded by voluntary levies. Under a commodity levy, all pan-industry research will come under a single umbrella to ensure there is a co-ordinated approach that achieves the objectives of the S&I plan.
Individual forestry companies are expected to make voluntary contributions, in addition to their commodity levy payments, to those research projects that address their own priorities.
Until the levy is in place, the industry needs to respond in a coordinated way to proposals for research funding. An interim R&D Committee will fill this role. It will be made up of five industry representatives (4 nominated by the FOA and 1 nominated by FFA) and two science experts (1 of whom will be well-connected to what is happening in forestry and related disciplines internationally).
