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Bush budget includes tax on sugar

WASHINGTON (AP) -- Lawmakers from Minnesota and North Dakota are vowing to kill President Bush's proposal to revive a 1990s tax on sugar growers.

The 1.2 percent tax, which is included in Bush's 2006 budget proposal unveiled Monday, would cost growers about $40 million a year, according to sugar industry officials. Minnesota and North Dakota, the nation's top two sugar beet-producing states, would take a big chunk of that hit.

"We were looking at all the programs across the board to make a contribution to deficit savings," said Department of Agriculture spokesman Ed Loyd. "We weren't singling out any programs."

Bush's budget proposal includes a 5 percent reduction in payments to farmers as he tries to cut spending. Sugar growers do not receive direct payments, but they do benefit from tariffs that keep out low-cost competitors, as well as a loan program that allows growers to sell their surplus to the government if prices fall below a certain level.

Rep. Collin Peterson, the ranking Democrat on the House Agriculture Committee, called the proposal dead on arrival.

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"That's not going to happen," said Peterson, whose western Minnesota district includes part of the sugar-growing Red River Valley.

Jack Roney, an economist with the American Sugar Alliance, which represents sugar growers and processors, said the tax amounts to $4.32 per ton of sugar. That would translate to $6,500 a year for an average-sized farm of 500 acres, he said.

"This is kind of kicking sugar producers when they're down," Roney said. "Sugar prices are down 20 percent since 1996. Now, we're hit with a new tax."

Roney said the tax is similar to one that was in place in the 1990s to help reduce the federal budget deficit. He said that was eliminated at the end of the decade when the government was running surpluses.

Sen. Norm Coleman, a Minnesota Republican, said he would fight to reverse the sugar tax, as well as cuts to other farm programs.

"The sugar tax would add to already low sugar prices and should be rejected," he said.

The state's other senator, Democrat Mark Dayton, was traveling and unavailable for comment Monday.

Sen. Byron Dorgan, D-N.D., said that the tax would be especially harmful if the Bush administration wins passage of the Central American Free Trade Agreement, which would let more imported sugar into the country.

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"It's something we'll try to derail in the Congress," he said of the sugar tax.

Added Sen. Kent Conrad, D-N.D.: "Our sugar beet growers and producers in the Red River Valley are already under siege by this administration's trade policies, and now the White House wants to impose a hidden tax."

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