The possibility of a water tax is concerning those with irrigation systems.
The Tax Working Group recommends a tax on water in its final capital gains tax proposal report.
Irrigation New Zealand chairperson Nicky Hyslop told Tim Wilson there are already lots of pressure on irrigators to be efficient with water.
"It costs a lot to turn on an irrigator in terms of electricity, water charges and labour."
Hyslop said there are also huge amounts of nutrient limits and regulation, which also impacts irrigation efficiency.
She said if these proposals are picked up, food producers in New Zealand's dry regions would be targeted.
"It doesn't make sense that areas like Hawke's Bay, Canterbury. Otago which have huge areas of irrigation, will be taxed the hardest."