State Board Wants Stealth Tax on Milk

In 2007, the state of Arkansas formed the Arkansas Milk Stabilization Board to address the decline in dairy farming in the state. It seems that over the last several years, dairy farms in Arkansas have had a rough go of it, with a few going out of business each month.

Last week, they struck upon a potential solution. Richard Bell, the state agriculture secretary, has proposed a “fee” on wholesalers that will generate an estimated $5 million a year, to be distributed among the approximately 145 dairy farmers in the state. The board is considering taking this proposal to the legislature.

But wait! Isn’t that a tax increase? Right after Gov. Mike Beebe, to his abiding credit, went to all that trouble to cut the state grocery tax in half?

Why, no, to hear board chairman Woody Bryant tell it to Charlie Frago of the Arkansas Democrat-Gazette in Friday’s edition:

Whatever fee is assessed may be passed by wholesalers to consumers, but Woody Bryant, the board’s chairman, said the idea isn’t a back-door grocery tax.

“It’s not a tax,” said Bryant of Lonoke County. Rather, the fee would be figured into “production costs” by assessing it on the wholesale level, rather than the retail level, he said.

What’s the difference between a fee and a tax? That’s not clear—the effect is the same, and the cost will be passed on to consumers. Bryant seems to think that by denying that the fee is a tax, he can define the question out of existence. His denial amounts to little more than a smokescreen.

Meanwhile, agriculture secretary Bell argues that this step is needed because dairy farmers are in trouble and because, as the ADG report paraphrases, “the state needs a local, safe supply of milk for its children.” (Is the current supply of milk, provided mostly from out of state, unsafe? Has Bell alerted the press and the public to this fact? I haven’t seen anything on that, have you?).

So keep a close eye on this Arkansas Milk Stabilization Board, which, if it has its way, will likely push for higher milk prices for every Arkansan in order to subsidize about 145 farms in the state that are fortunate enough to have a well-placed lobby advocating on their behalf. More on this soon.

P.S. The feisty Arkansas Journal blog is also beating this drum, and asks an additional question: If a fee increase won’t raise prices, “why not raise them to $100 per gallon, or $1,000? Think of how great it is that we can enrich these farmers without even raising the price!”

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One thought on “State Board Wants Stealth Tax on Milk

  • August 18, 2008 at 5:30 pm
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    Yes, drive the cost of a household staple up to benefit a small group of farmers. Excellent idea Arkansas house and senate. Keep up the good work for the middle class and common man there, Democrats!

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