FED: Milk producers call for GST exemption

AAP General News (Australia)
04-06-1999
FED: Milk producers call for GST exemption

CANBERRA, April 6 AAP - A major dairy cooperative has called for milk to be exempt from a
GST, saying the new tax would increase prices, reduce consumption of an important health food
and hurt rural communities.

The Australian Democrats backed the call, describing it as the first significant industry
support for an exemption on food.

Milk, and other fresh foods, are free of a wholesale sales tax (WST) so their price would
rise if a 10 per cent GST were introduced to replace WST.

Dairy Farmers has told the Senate select committee inquiry into the tax package that
applying a GST to milk would lead to a significant increase in retail price, thereby
discouraging consumption.

This would diminish the health benefits to the community of regular milk consumption, given
its nutritional benefits, and would unfairly hit low-income households because milk is a far
larger proportional daily expense for low-income earners than high-income earners.

A GST on milk would further reduce margins for farmers in an industry already experiencing
upheaval and uncertainty caused by deregulation, forcing some farms to close, and reducing
investment and jobs.

Dairy Farmers noted that most nations with a GST or VAT exempted or applied a concessional
rate to milk.

"The negative impacts associated with imposing a GST on white milk clearly outweigh the
immediate financial gains," Dairy Farmers said in a written submission.

"The Australian community will continue to receive health, social welfare, rural and
regional benefits by the government continuing its traditional position of not applying
wholesale sales tax, or any form of consumption tax, on white milk.

"Accordingly, Dairy Farmers strongly believes that these reasons necessitate the
preferential treatment of white milk, specifically GST-free status for white milk."

Democrats rural spokesman John Woodley said a GST on food would lead to price rises of more
than six per cent for fresh meat, vegetables, fruits, milk and cereals.

"Rural Australia will suffer if fresh food costs three times more than junk food," Senator
Woodley said in a statement.

"The Democrats are rock solid in our opposition to a GST on food. That includes milk, which
is an absolute staple of the Western diet."

The select committee is due to release its final report on April 19.

AAP kaw/mfh/it

KEYWORD: TAX MILK

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