Industry ‘head tax’ adds strain to feedlots

In the wake of the pending closure of Western Feedlots, one of the largest such operations in Alberta, a group of southern Alberta feedlot owners says a new municipal tax puts even more pressure on their ability to operate.

Lethbridge County has imposed a $3 per animal unit tax on livestock producers as a way of raising funds it says are needed to upgrade rural roads and bridges that form the market access network. That amount is slated to increase to $4 in 2017.

Six feedlot owners, who together make up the bulk of fed cattle operations in Alberta’s so-called feedlot alley, have filed a lawsuit against the county, claiming the tax puts an unfair burden on the sector.

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“Lethbridge County cattle feeders, who have more than half of the cattle on feed in Alberta and Saskatchewan, are facing the same regulatory and tax burdens that shut down Western Feedlots in High River, Alta., last week (Sept. 21),” the group said in a news release.

The release said the so called “head tax” imposed by Lethbridge County council would magnify the problems.

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None of the Western Feedlots operations are in Lethbridge County, so that was not a factor in its decision to cease operations.

However, Lethbridge County is home to an estimated 50 percent of confined cattle feeding operations in Canada.

The court case is slated to be heard this winter. In the meantime, the litigants have started a campaign to explain their position, which includes full-page ads in a local newspaper and the hiring of a public relations firm.

Rick Paskal, president of Van Raay Paskal Farms and one of the litigants, said the head tax coupled with other stressors on the industry could drive more feedlots out of business.

“We have a hard time right now bidding against American feedlot operators to keep those cattle in the county,” Paskal said Sept. 29.

“It’s not about if we’re making money or not. It’s about the environment that we are forced to work in to be competitive.”

County officials did not return calls for comment, but reeve Lorne Hickey has said in past interviews that the tax is needed to maintain and improve infrastructure and that revenue from the provincial government is not sufficient to do that.

Hickey has also said the new tax is favoured by some county residents because it aims to tax those who make the most use of the roads.

“This kind of has split the agriculture community a bit because if you look at the statistics, everybody has to use the same roads but the majority of the use of the roads is from one particular industry,” Hickey said in a June interview.

“The other people are kind of feeling that it’s about time that other people make a contribution towards the maintenance and the infrastructure, so there is a little bit of a rift between the farmer and the feedlot operator.”

Paskal said he thinks the county has a spending problem rather than a revenue problem, and could hire private contractors more cheaply than using its own crews for road improvements.

He said the feedlot owners who filed the suit have paid the tax for this year but if it continues to be applied and potentially increased, it jeopardizes a sector that generates more than $1 billion in gross domestic product for the region.

The Alberta Cattle Feeders Association has also objected to the Lethbridge County tax. Most of its members live there.

Bryan Walton, chief executive officer of the ACFA, said the organization has written to Alberta’s minister of finance and met with the ministers of agriculture and municipal affairs.

“It’s a complicated file because you have the Municipal Government Act, you have the County of Lethbridge, you have the lawsuit that’s going on. The reality is, when you’re unfairly penalizing one sector over others, then that’s just destructive tax policy,” Walton said.

The Alberta Municipal Government Act is currently under review. Revisions could address the shortfall in infrastructure funding for rural municipalities but that remains to be seen.

Paskal said the feedlot litigant group made a presentation to the committee reviewing the Municipal Government Act. It believes an increased tax on fuel, with proceeds channelled to municipalities for use on infrastructure, is one example of a fairer method of taxation.

“We need all three levels of government to work together on long-term, fair and stable funding for infrastructure, so we don’t have punitive, industry-targeted taxes like Lethbridge County’s head tax emerging in municipalities across the province,” said Paskal.

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