A key question Australian cattle producers are being asked to consider in the latest discussion paper released as part of the Cattle Transaction Levy Review is whether the levy’s collection mechanism should change.

Should it remain a flat, fixed-rate levy that does not change regardless of market or seasonal conditions, as it has for the past 20 years?

Or should it move to a more value-based approach, such as a levy calculated as a percentage of an animal’s value?

The latest discussion paper says the consultation process has raised discussion about an “ad valorem” or indexed levy collection mechanism, where the levy would represent a percentage of the overall value of the transaction or price indexed against an industry benchmark, such as the Eastern Young Cattle Indicator (EYCI).

“(This) could offer greater equity to industry members, especially during times of drought,” the paper states.

“This could also be considered a more modernised approach to levy collection, given the separation of the value of certain production system units becoming far more distinct and the industry less homogenous than 20 years ago.”

The case for switching from a flat-rate levy to an ad valorem, or percentage-of-value, levy has been raised in recent years by commentators including Simon Quilty (here) and Justin Toohey (here), who argued a percentage-based levy would provide a more equitable payment model and better reflect an animal’s true value at the time of sale.

Percentage-based levies are already used in some agricultural sectors, including coarse grains and wool. The wool levy, for example, is based on a percentage of gross wool sale proceeds, with levy payers voting every three years to determine the applicable rate for the next three years.

Feedback on fixed versus percentage-based levies provided to a 2014 inquiry into agricultural levies highlighted differing views. Some respondents preferred the current flat-rate system because of its simplicity, while others believed a percentage-based levy would disproportionately affect producers selling higher-value cattle, such as stud stock and premium Wagyu.

Mr Quilty has proposed capping a percentage-based levy at a maximum amount per head as one way of addressing those concerns.

Others have previously argued for a higher fixed-rate levy to better reflect today’s higher cattle values, while some have opposed any increase or questioned whether a levy should exist at all.

The latest discussion paper acknowledges that “there are arguments in favour and against” an ad valorem model.

It says careful analysis would be needed to determine an appropriate percentage rate, ensure equity across high- and low-value transactions, and address other considerations before such a model could be formally presented to industry.

The paper asks producers whether an ad valorem levy would provide a fairer outcome for individual levy payers and benefit the industry as a whole.

It also seeks feedback on whether an indexed levy, such as one linked to a benchmark like the EYCI, would provide a more appropriate charging mechanism that delivers broader industry benefits.

The opportunity for producers to provide direct feedback continues at face to face meetings this week and through until the end of August at the following locations:

• Monday 3 August 6 pm – Malanda, Malanda Hotel Ballroom – Register Here
• Tuesday 4 August 10 am – Conjuboy, Oasis Road House – Register Here
• Tuesday 4 August 6 pm – Charters Towers, Charters Towers RSL – Register Here
• Friday 7 August 9:30 am – Brisbane, Rydges Hotel – Register Here
• Monday 10 August 1:30 pm – Moree, Weebollabolla Sale Complex –Register Here
• Monday 10 August 5:30 pm – Kununurra -Kimberly Grande Resort, Argyle Room –Register Here
• Tuesday 11 August 9:30 am – Glen Innes, Glen Innes RSL
• Tuesday 11 August 3:30 pm – Walcha, Walcha Bowling Club – Register Here
• Wedensday 12 August 11:00 am – Tamworth, 3R Angus – Register Here
• Thursday 13 August 9:00 am – Dubbo, Polldale Sale Complex – Register Here
• Thursday 13 August 4:00 pm – Orange, Conobalas Hotel  – Register Here
• Monday 17 August 11 am – Cloncurry, Concurry Precinct – Register Here
• Monday 17 August 5 pm – Longreach,  Birdcage Hotel – Register Here
• Tuesday 18 August 12 noon – Augathella, Bowls Club – Register Here
• Tuesday 18 August – Roma, The Club Hotel – Register Here
• Monday 24 August – Alice Springs, Arid Zone Reaserch station
• Tuesday 25 August – Tennant Creek, Barkly Business Hub
• Thursday 27 August – Katherine, Reaserch Station
• Friday 28 August – Darwin, John England Building