Dept. of Agriculture to Levy Assessment, Defend Reputation of Christmas Trees

November 9, 2011

UPDATE: See this blog post for new developments.

The Chicago Tribune reports that the Department of Agriculture has announced plans to levy a 15 cent assessment on all real Christmas trees. The estimated $2 million in revenue will be used to fund a PR campaign intended to present “a favorable image of Christmas trees to the general public with the intent of improving the perception and competitive position of Christmas trees and stimulating sales of Christmas trees.”

Officials at the Department of Agriculture argue the program is justified given “increased competition and changing consumer habits.” By that I assume they mean less traditional products, namely fake trees, that some consumers apparently find more appealing and a better use of their money.

Similar strategies have been used in the past by the Department of Agriculture. Everyone knows the “Got Milk?” campaign and which meat is the “other white meat.”

According to the Department’s analysis the industry has tried three separate times to implement a real tree promotion program, but failed after the funding, based on voluntary contributions, dried up. That might be a free rider problem, or it might just be that some producers didn’t think there was enough benefit to justify the cost. Either way, government intervention isn’t obviously justified.

Is the new levy a fee or a tax? CATO argues that it is a tax, but I’m not so sure. If the revenue, having been collected from tree producers, is dedicated to paying for a service that only tree producers directly benefit from, there is a case for calling the levy a “fee.” But that doesn’t mean the fee is justified.

Will the levy increase Christmas tree prices? Maybe, maybe not. That depends in part on whether tree sellers can easily pass on the cost without losing sales.

Those who prefer to buy “holiday trees,” “solstice-celebration perennials,” or any other non-“Christmas” winter plant decoration may wonder if their preferred plant is included. The definition given in the regulation is that a “Christmas tree” is “any tree of the coniferous species, that is severed or cut from its roots and marketed as a Christmas tree for holiday use.” This definition is actually unclear to me. As currently written it sounds like it would apply only if the trees are marketed as “Christmas trees.” Ultimately, it will probably depend on how officials interpret the regulation.

Clearly, those families with Festivus poles don’t need to worry.

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