The Green Party's proposal to replace the Emissions Trading Scheme with a carbon tax would reduce New Zealand's overall tax burden, The Taxpayers' Union says.
If elected in September this year, the Greens want to scrap the scheme and instead charge industrial polluters $25 per tonne on carbon emissions.
Dairy farms would also be charged, but at half the rate, with the money going towards a reduction in company and personal income tax. Sheep and beef farms would initially be exempt.
Taxpayers' Union director David Farrar said on Monday that the policy made sense.
"We think it's good to see political parties not just saying we will increase taxes overall, but that they do want to propose a tax in a specific area, that they reduce taxes elsewhere."
Mr Farrar said the proposed tax was also simpler than the emissions scheme it would replace.
The union said the policy would reduce compliance and administration costs and result in a stable price for emitters.
A carbon tax would be also welcomed by the Climate and Health Council, which said all parties needed to come up with plans to genuinely address climate change.
Co-convenor Rhys Jones said the climate protection plan set realistic and appropriate targets to reduce emissions, and effective mechanisms for reaching them.
"It sets the bar in terms of the type of policy and the type of plans we need to address climate change."
Announcing the policy on Sunday, Green Party co-leader Russel Norman said revenue raised from the carbon charge would be returned to taxpayers through a $2000 income tax-free band and a 1 percent company tax cut. He said the policy would leave households, on average, about $320 better off every year.
'Costly for households'
But Climate Change Minister Tim Groser said the proposal would slash New Zealanders' standards of living and attack those who contributed to the economy, including dairy farmers.
"The idea that you would implement the very policy that the Australian government is in the process of dismantling, after they saw the effect it had on their economy and their business confidence, is amazing."
Prime Minister John Key said New Zealanders would end up being the big losers from a policy that puts greater costs onto households and businesses. It would also make New Zealand less competitive and cost jobs, he said.
Federated Farmers believed the proposed tax would make New Zealand's primary export industry less competitive than other nations.
President Bruce Wills said emissions were much less than most other countries which produced similar products, and the policy made little sense.
"All this is going to do is make New Zealand products less completive against other countries in the world."
The immediate impact would be that farmers would running fewer stock, which would eventually affect export earnings, he said.