Farm Groups Unite Against Oil Tax
MADISON, April 22…..Three of Wisconsin’s leading agricultural organizations made common cause Wednesday on what’s becoming a hot issue in the state Capitol: opposition to the gross receipts tax on motor fuel sales proposed in the pending state budget bill.
In a joint memorandum prepared for distribution to state lawmakers, the Wisconsin Farmers Union, Wisconsin Farm Bureau Federation and Cooperative Network—formerly the Wisconsin Federation of Cooperatives—said the proposed oil tax threatens to take away millions of dollars in patronage-based payments now going to members of local non-profit farm supply co-ops.
The money—more than $39 million returned to local co-ops by their two wholesale motor fuel supply cooperatives for 2007 and 2008—“flows back into the local economy” of rural Wisconsin communities, the three farm organizations said.
The payments are required by law as a condition of non-profit tax status. The tax code calls for net proceeds over and above expenses and capital requirements for co-op operations to be returned to cooperative member-owners.
Based on their amount of patronage during the preceding fiscal year, payments to individual co-op members can range from a few dollars to several thousand. The return of that cash helps make the cooperatives “a vital economic engine in rural Wisconsin,” the joint memo said, asking legislators not to impose “the new tax burden of an oil gross receipts levy that takes patronage payments away from Wisconsin’s rural citizens.”
The budget bill contains “anti-pass-through” language forbidding a company to recover the cost of the tax by boosting prices to consumers. Critics say the language would be unlikely to withstand a legal challenge, citing a similar provision tossed out as unconstitutional by a court in New York State.
But the farm organizations argue that even if the anti-pass-through language were to pass constitutional muster, the tax would place a unique disadvantage on members of rural cooperatives.
Because the tax would carve out a share of gross receipts, co-ops would be forced to cut back and in some years eliminate patronage payments to their members, the organizations say.
Wisconsin Farmers Union, Sue Beitlich, President (715) 723-5561
Wisconsin Farm Bureau Federation, Bill Bruins, President (608) 828-5701
Cooperative Network, Bill Oemichen, President and CEO (608) 258-4413
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