26 March 1999

Input tax draws nearer

PESTICIDE taxes seem increasingly likely with a government report concluding that, despite the losses of up to 2,000 farm jobs, a tax would yield substantial environmental benefits for the general public.

The report, produced for the Department of the Environment, Transport and the Regions, was commissioned to establish whether or not a pesticide tax would help to achieve the governments aims of minimising pesticide use.

According to the report, released yesterday (Thurs), reductions of up to 20% in pesticide use would be achieved with a 30% tax. But it adds that far higher reductions could be achieved if the more toxic pesticides were taxed harder.

It says that revenues for the Treasury of £4m to £10m could be achieved from a 30% tax. At this level it estimates that farm incomes – based on 1996 figures – would be cut by 3%, with 2% of farms becoming unprofitable.

Although the tax would cause the industry to shed 1000 to 2000 full time jobs, the report counters that, in the long term, job retention could be improved.

Commenting on the report an NFU official said the findings flew in the face of earlier reports by the Centre for European Agricultural Studies which suggested taxes would have to be levied at up to 400% to produce any meaningful reduction in use. And at this level £320m of additional revenue would be raised for the Treasury.

She added that the report stated how much the tax would cost but did not quantify the benefits to the environment.

Government will now consult the industry on the reports findings.