The Manitoba government has killed a proposed surcharge on quota transactions for dairy, eggs and poultry.
The province will not proceed with the controversial two per cent levy after including it in the 2010-11 budget last spring, Manitoba Agriculture Minister Stan Struthers said.
Struthers made the unexpected announcement at the Dairy Farmers of Manitoba annual convention banquet Dec. 2.
The province’s about-face on the levy surprised milk producers almost as much as the original news of it did.
But they were pleased.
“We’re certainly glad that the situation has turned around,” said David Wiens, DFM chairman.
The NDP government stunned Manitoba’s supply management industry in March by announcing a two per cent levy on the value of successful quota transfers.
In a quota exchange, producers submit offers to buy quota and bids to sell it. Successful exchanges occur when a matching price is reached.
DFM holds quota exchanges every month. Egg, chicken and marketing boards do so less frequently.
Government officials at the time said the levy was budgeted to raise $300,000 a year in general revenue for the province. DFM said the amount could run as high as $500,000 on milk quota exchanges alone.
Producers objected strongly to the levy, saying they were never consulted about it and calling it a tax grab by the province.
Their main objection was that the money would go straight into government cof- fers without directly benefiting the industry.
Dairy farmers felt particularly disadvantaged because they regularly buy and sell small amounts of quota throughout the year to fine tune production on their farms.
Producers argued that having to pay a levy on every
transaction, however small, might discourage people from using the exchange to manage their quotas.
“It’s important that producers can match their quota to their production,” said Wiens. “It’s an important tool in our tool box.”
Industry representatives aired their concerns to government officials at a meeting in April but had not met since.
Wiens said he could not speculate on reasons for the government’s reversal. A government spokesperson for Struthers would only say the minister “listened to the concerns of the industry and that’s what came out of it.”
But Wiens said supply management boards in other provinces had been nervously watching the situation in Manitoba, worrying their own governments might try the same thing. [email protected]
– DAVID WI ENS, DFM