13 August 1999

A tax that helps nobody

By Andrew Blake

PLANS to levy hefty taxes on pesticides (Arable, Aug 6) have been slammed by the NFU. Although farm profits would crash, there would be little or no benefit for the environment, it maintains.

But it is not too late to prevent a tax being introduced, stresses NFU cereals committee chairman Richard Butler. "We are sitting in the last chance saloon. But it is still not too late to get a change of heart from the government." He urges all growers to write to their MPs to protest against the tax plans.

Todays regulatory mechanism for pesticides serves the UK better than a recent report for the government is prepared to acknowledge, the NFU maintains.

Over-simplistic and fundamentally flawed is how the union views the belief that a tax would help the environment. Furthermore, figures used in the ECOTEC report on the design of a tax or charge system for pesticides are critically out of date, it adds.

"We believe the argument that a tax would reduce pesticide use and therefore benefit the environment is unacceptably crude and simplistic," says NFU president Ben Gill. "The environmental benefits to be achieved are highly questionable and the effects could on occasion be negative.

"We are not asking the government to abandon proposals for this tax simply because of the catastrophic impact on farmers – although that is reason enough. We say taxing farmers in this way will not achieve the desired aim. This tax simply will not work."

NFU pesticides specialist Chris Wise points out that the ECOTEC report is based on 1996/97 prices, since when the rewards from cereal growing have slumped dramatically.

Recently commissioned work by the Centre for European Agricultural Studies found the report ignores the fact that a tax on risk-reducing pesticides is likely to lead to more volatile incomes. The CEAS also highlights conflicting assumptions within the ECOTEC analysis, he adds.

"If policy makers do conclude that some adjustment is required to maintain the correct balance between the social benefits and risks of pesticide use, the solution is to reform that mechanism, not to impose inappropriate economic solutions," says Dr Wise.

The ECOTEC report acknowledges that the environmental benefits of the proposed instrument are difficult to quantify, says David Brightman, chairman of the NFUs pesticides working group. "At best I believe they will be zero, and at worst negative."

"A pesticide tax is potentially devastating," says Mr Butler. "Its the number one issue for arable producers."

A recent Masstock study suggests the proposed tax would trim the already wafer-thin profit on a typical 200ha (500 acre) arable unit by 75% to just £12/ha (£5/acre), he notes.

"Arable farms are finding it hard enough to cope with the strength of the pound and Agenda 2000. Adding a pesticide tax would create a government-imposed triple-whammy which would export British jobs but provide no environmental benefit.

"There would also be an overwhelming temptation to cut corners by reducing application rates. With fungicides that would probably lead to more disease resistance and hence the loss of key crop protection products. Its a very real danger.

"We must also remember that we are competing in world markets. Cuts in the use of pesticides could have a very damaging effect on the quality of grain we deliver abroad. We could become even more uncompetitive."

"Its still not too late for a reprieve. One of the most useful things growers stopped from combining by rain can do is to write to their MPs or the DETR to try to stop the tax."

POINTS BOX]

Flawed tax proposals

&#8226 Environmental benefits in doubt.

&#8226 Economic analysis outdated.

&#8226 Regulatory system better than credited.

&#8226 Unnecessary part of triple-whammy.

FLAWEDTAXPROPOSALS

&#8226 Environmental benefits in doubt.

&#8226 Economic analysis outdated.

&#8226 Regulatory system better than credited.

&#8226 Unnecessary part of triple-whammy for arable farmers.

Swingeing new taxes on pesticides and energy could cost farmers a fortune. Dont let the government tax you out of business. Write to your MP now, pointing out:

&#8226 The severe financial consequences for your farm and local suppliers,

&#8226 Unlikely benefits for environment, consumers or operators,

&#8226 Shaky basis in science,

&#8226 Confused and unmeasurable aims.