Tax proposals threaten future milk research
FARMING will be in the line of fire if government proposals to strip research bodies of corporation tax exemption go ahead.
On the hit list will be the farmer-funded Milk Development Council, the body set up to represent the countrys dairy farmers after the MMB disappeared.
It could face a tax bill of £1.5m, most of which relates to its first year (to March 1996), when a £3.5m surplus was made. At the time, levy payments were coming in, but research outgoings were limited. And, as a newly-formed body, it had not been granted exemption from tax.
But the MDC hit out at the Department of Trade and Industrys proposal this week, dubbing it unfair and unjust. It opposes both the principle of taxing not-for-profit research groups and also the idea of back-dating the claim.
Calling on farmers to lobby their MPs, chairman, John Moffitt, warned it could put dozens of research projects at risk. Over its first two years the group supported 78 projects, valued at over £7m.
The councils other work – including human nutrition and education programmes and in the field of dairy statistics – would also come under pressure, he warned.
The money is raised by a statutory levy on dairy farmers, currently 0.04p/litre.
"Dairy farmers would feel rightly aggrieved if this was to go through," he said. "Successive governments have reduced their funding of near-market research and made industry responsible for investing its own money in this area. Surely, common sense requires that they cant now decide to tax the very industry funding which has been set up to achieve this."
Mr Moffitt vowed to pursue a judicial review if the outcome was unfavourable. But the fight would be costly in terms of time and money, he said.
Meanwhile the council has had to make provision for the possible bill in its 1996/97 accounts, due to be published shortly.
The NFU also criticised the plans. Milk and dairy produce adviser Julie Smith said: "Farmers will be exceedingly disappointed if they hear that the money they are volunteering is going straight out of their pockets and in to government coffers."
The Scottish NFU declared it "nothing less than the confiscation of vital research funds".
President Sandy Mole wrote to the Secretary of State for Scotland. "He should be able to knock some sense into these dunderheads at the DTI in London," he said.n