Oil Tax Hits Wrong Target, Co-ops Say
Madison, Wis. (February 18, 2009) – The gross receipts tax on oil companies proposed Tuesday night in Governor Doyle’s state budget address will punish Wisconsin consumers and rural communities instead of foreign oil producers and investors, cooperative leaders are saying.
That’s because the proposed tax would drain away patronage credits paid by local cooperatives to their members, siphoning that money out of the local economy, according to Cooperative Network President and CEO Bill Oemichen.
“We fully realize the Governor has a difficult fiscal challenge on his hands, but this tax is not a good way to meet it,” Oemichen said. “It will scoop up millions of dollars now being directly plowed back into the local economies of rural Wisconsin communities by thousands of farm supply cooperative member-owners, and hand that money over to state government instead.”
Earnings over and above those needed to cover the expenses of these locally-owned cooperatives are returned to their members, based on the amount of their patronage over the course of any given year.
Oemichen said the oil tax would wipe out “most if not all of this patronage distribution” which has been a significant source of additional consumer spending—“call it ‘stimulus’ if you like,” he said, in rural communities.
Moreover, because the tax is based on gross receipts it would take in more money in years when gasoline prices are higher, thus draining larger amounts of money out of local economies when energy costs are highest, Oemichen explained.
“It would have the perverse effect of taking something we ought to prize—local people spending their own money and helping to grow their own local economy—and treating it as if it were an excess profit,” he said. |
