A group representing rural water users says a new tax is not the best way to improve water efficiency.
A possible water tax was examined in a report released by the Government's Tax Working Group on Thursday.
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However Irrigation NZ thinks introducing a nationwide water tax is not workable.
"A water tax has been considered in other countries but in every case it has been abandoned," said Irrigation NZ Chief Executive Andrew Curtis.
"Other countries have found it too complex and expensive to design a fair water tax which can be easily implemented without resulting in adverse outcomes," he said.
Irrigation NZ believes that allowing irrigators to continue to invest in more modern irrigation systems rather than taxing them will result in the biggest improvements in water use efficiency.
"The Interim Tax Working Group Report touches on some of the complexities around a water tax, like the need to address Māori rights and interests, with many more issues yet to be examined," said Mr Curtis.
He is pleased the report recognises that many groups use water, and taxation would not just affect irrigators.
"In Canterbury, for example, 55% of water is consented for hydro-generation, 29% is consented for irrigation and 16% is consented for other uses," he said.
He believes regulations and limits on water availability are already driving the adoption of more efficient irrigation systems.
Mr Curtis said that introducing a blanket national water tax will make it more difficult for farmers and growers to install more efficient irrigation systems and will reduce the amount of money available to change farm practices by adding a new cost for irrigators.