A new proposal to tax dairy products has been introduced in the Arkansas legislature. HB 1451, sponsored by Representative John Hoyt, would impose a premium of 30 cents per hundredweight on all dairy products distributed in the state.
The revenues from this fee are to be used by the Arkansas Secretary of Agriculture to pay Arkansas dairy farmers the difference between the blend price in Arkansas and 70 percent of calculated production costs. The payment to farmers would be capped at $5 per hundredweight. The Secretary is also directed to pay incentive bonuses from the fund for increasing production and for milk quality.
IDFA questions the economic reasoning behind the new premium. Arkansas has recently lowered its sales tax on food and is now considering singling out dairy products for increased taxes.
"With the recent decline of milk prices across the nation, decreasing demand while increasing supply doesn't make much sense," said Jerry Slominski, IDFA senior vice president. "Charging 30 cents per hundredweight on all dairy products distributed in the state but using the collected money to help only Arkansas dairy farmers is probably unconstitutional, and the plan places out-of-state farmers at a competitive disadvantage."
IDFA members doing business in Arkansas are urged to let their state representatives know of their opposition to this bill. For more information, contact Will Telligman, IDFA legislative coordinator, at email@example.com or 202-220-3528.
To review IDFA's chart of all state legislation related to dairy, click here. This new chart will be updated on a periodic basis to provide the status of monitored bills.