AN EXAMINATION OF THE TAX SUBSIDIES TO THE DAIRY SECTORS IN CANADA, GERMANY, NEW-ZEALAND AND THE UNITED-STATES

Subsidies to agricultural producers through domestic tax and social pr ogramme policies are generally not included in producer subsidy equiva lent (PSE) measures. This study examines the price induced distortions of domestic tax policy and social programmes on dairy trade between C anada, New Zealand, Germany, and the United States. The degree of tax subsidisation and the price subsidies needed to offset the tax and soc ial programme advantages enjoyed by each country are estimated using a simulation model. Study findings suggest that current German taxation policy provides a substantial subsidy to dairy producers. Canadian an d US farmers also have some trade advantages because of tax policy and social programmes.