Clashes over dairy farmers' fair share of tax

A Waikato dairy farmer herds his cows towards the milking shed. Photo / David White

The Government and dairy industry have rubbished claims dairy farmers are not paying their fair share of tax with Dairy NZ data suggesting the sector's tax bill was almost ten times as much as was reported yesterday.

Labour's revenue spokesman Stuart Nash this week released Inland Revenue (IRD) data which shows the 17,244 individuals, companies and trusts that identified themselves as dairy farmers during the 2009 tax year paid just $26 million in tax - an average of just $1508 each.

The average wage earner on the other hand, with income of $50,000 a year pays just over $8000 a year - more than five times as much.

"When the country is such a state at the moment where you've got a lot of hardworking kiwis that are really struggling and they are paying their fair share in tax, there's a perception that the farming sector in fact isn't paying their fair share... the figures bear out that perception," said Mr Nash.

But Revenue Minister Peter Dunne said he was confident the dairy sector was paying its fair share of tax.

Although he said the data from IRD was as accurate as could be provided, the self classification system used meant a significant number of dairy farmers would not have been captured in the dairy classification.

The Dominion Post reported the dairy farmers paid an average $1506 in tax during the 2008 2009 tax year on an average dairy payout of $500,000, but Mr Dunne, Finance Minister Bill English and Prime Minister John Key all said that figure was turnover rather than profit which was what all businesses were taxed on.

Mr Key said the figures presented by Mr Nash were "a small slice of what is paid by dairy farmers".

Dairy NZ said the average tax paid by dairy farmers over the last decade was $28,225.

"Our figures show that on average, approximately $300 million tax is paid per year by dairy farms," said Dairy NZ chief executive Tim Mackle.

Based on data in Dairy NZ's Economic Survey 2008 2009, dairy farmers paid about $240 million in tax for that year and the average owner operator dairy farmer paid $22,000.

The data obtained by Mr Nash also suggested livestock farmers other than dairy farmers paid tax of $81 million during 2009 which works out to an average of just $2594 per farmer.

But Mr Dunne said looking at the total picture of primary sector taxation, "I'm satisfied that we're getting what is the right balance".

Dairy Farmers tax paid in 2008-2009

Average tax per farmer:
IRD Data provided to Labour $1508
Dairy NZ data $22,126
Total tax from dairy farmers
IRD: $26m
Dairy NZ: $240m*
Number of farmers
IRD: 17,244
Dairy NZ: 11,691

* includes average tax of $17,877 paid by 4125 sharemilkers