Hefty input tax measures could be in pipeline
PESTICIDE and fertiliser taxes of up to 125% could be announced in the Budget on Mar 17, and imposed as soon as Apr 1999, according to the British Agrochemical Association.
Patrick Goldsworthy, BAA stewardship manager, said that reports considering 50% and 125% tax rates suggested cereal growers would cut grass weed herbicide inputs by up to a third.
He claimed, therefore, that the department of environment, transport and the regions, had spotted a way of raising money for the Treasury by taxing arable inputs.
"Once the tax is in place it would be easy for politicians to increase the rate. There is also no guarantee that the revenue raised will be returned to farmers who pay it," he warned.
And he questioned what the effect would be on UK grain exports. "How will we compete… with an environmental hurdle in place that most other countries do not have?"
Input taxes could also damage the environment, he suggested. "With margins already squeezed, pesticide taxes could tempt growers to farm every square metre to stay in business."
Derek Ward of supply trade body UKASTA said government might not have had enough time to get the tax introduced in this Budget because its industry consultation on the proposal ended just over a month ago. But he feared a tax was likely later this year because the chancellor had already indicated his support for it.
"The taxes proposed could reduce farm margins by 10-20%, putting the UK at a competitive disadvantage with the rest of the world," said Mr Ward.
The NFU response to the DETR consultation paper calculated a pesticide tax alone could net the Treasury £200m/year – 10% of the entire UK farming industry profits in 1997.
And it suggested that to have any effect on fertiliser use, a 300% tax would be needed. For pesticides, taxes of up to 175% would be required before there was any noticeable reduction in use.
Wilts-based arable, beef and dairy farmer, and former MAFF regional panel chairman, Robert Lawton, said his sources within government suggested a tax was very likely this month.
"A tax would be a kick in the teeth for the industry which had worked hard to adopt integrated crop management principles and had ensured that over-application was a rarity," said Mr Lawton.
A Treasury spokesman said that the chancellor was giving careful consideration to the taxes and to the industry responses to the consultation document.