(F.A.C.T.) Fair Agricultural Chemical Taxes
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| Executive Summary |
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 s economists have long known, we use less of what is taxed and more of what is not. Currently, twenty-nine states exempt agricultural chemicals from sales taxes amounting to nearly $700 million in uncollected revenue. These tax exemptions implicitly encourage chemically-intensive agriculture and discourage the use of non-chemical alternatives. The exemptions are unfair to people and wildlife experiencing the health consequences of agri-chemical exposure, to other industries that are paying for the costs associated with their environmental and health impacts, and to the taxpayer ultimately footing the bill for environmental clean-up.
The Fair Agri-Chemical Tax (FACT) Campaign - a nationwide alliance of state farm, consumer, and environmental groups - advocates for the repeal of state sales tax exemptions for agricultural chemicals. At the same time, the FACT Campaign supports the return of the sales tax revenue to the farmer through other tax relief, farmland preservation measures, or programs supporting more environmentally friendly farming. In this way, farmers who use chemicals would pay more of their fair share to address the environmental and health impacts associated with use of agri-chemicals but they would receive support for transitioning to more sustainable farming practices. The top ten sales tax revenue-losing states are Minnesota, Texas, Illinois, California, Florida, Indiana, Washington, Kansas, Ohio, and Missouri. California, Wyoming, and Nevada exempt only fertilizers from sales tax while Nebraska exempts only pesticides. A complete table of sales tax revenue losses in the twenty-nine states including a breakdown by pesticide and fertilizer sales follows in the narrative. The objective of this report's recommendations is not to penalize farmers, but to shift funds to encourage more sustainable agriculture. The tax revenue collected should be directly applied to benefit farmers whose practices protect the environment. Our aim is to encourage and support the trend towards environmentally friendly farming practices - practices that in numerous studies are proving to be more economically beneficial than agri-chemical dependence. Eliminating sales tax exemptions does not threaten the farmer using agri-chemicals. Farmers can successfully reduce their chemical use to offset the costs of the sales tax as shown by nearly twenty years of literature comparing conventional and alternative farming systems.1, 2, 3, 4, 5, 6, 7, 8, 9, 10 The "polluter pays principle" means that the industry or individual adversely impacting the environment pays the costs of reversing that damage. It is a market approach to environmental protection and works to complement traditional government regulation. Compared to a variety of more punitive and special taxes that could be applied for the use of environmental toxins, closing exemptions from sales taxes is considered very conservative and reasonable.11, 12 Sales taxes are a relatively minor portion of the overall costs of crop production. Their impact on the producer, the user, and the consumer is likely to be minimal. On the other hand, sales taxes can generate substantial revenue that can be used to fund important programs, such as monitoring, research and technical assistance regarding the use of alternatives to hazardous chemicals, farmland preservation, and agricultural pollution clean-up. We are living in a chemical soup from cradle to grave and no one can escape exposure through food, water and air. Our streams, groundwater, lakes, soil, air, food, and even our own bodily tissues, all show the presence of agricultural chemicals.13 The major agricultural pesticides used are increasingly associated with groundwater contamination, atmospheric degradation, and a variety of deleterious effects on human and wildlife health.14, 15, 16, 17, 18, 19, 20, 21 The ten major classifications of pesticides in order of descending toxicity include organochlorines (most have been banned from use in the U.S.), organophosphates, carbamates, phenoxys, triazines, benzimidazoles, benzonitriles, dinitroanilines, pyrethroids, and botanicals.22 Excessive chemical fertilizer use is associated with groundwater contamination, blue baby syndrome, soil acidification, and global warming.23, 24, 25, 26 The impacts of agricultural chemicals on human health — like any human health effects — can be broadly categorized as acute and chronic. Acute effects occur relatively quickly upon exposure to elevated levels of pesticides; these can encompass adverse effects ranging from headaches, dizziness, irritability and nausea to significant nervous system impairment and death.27 Chronic effects include the development of long-term illnesses, such as cancer. Wildlife can be profoundly affected by loss of habitat and contaminated food due to pesticides. This can result in a variety of weaknesses and illnesses that impair an animal's ability to survive or reproduce. It is estimated that of the roughly 672 million birds exposed annually to pesticides on U.S. agricultural lands, 10 % — or 67 million — are killed. This staggering number is a conservative estimate that takes into account only birds that inhabit farmlands, and only birds killed outright by ingestion of pesticides.28 In addition, more than 500 insects and mite species have become resistant to one or more pesticides, thus requiring either higher quantities or more toxic chemicals to manage them.29 Because of high levels of agri-chemical use, the $600 billion industry of agriculture is imposing huge environmental and human health costs without bearing the substantial financial responsibility. Nationwide, these costs as a consequence of pesticide use alone were estimated to be about $8 billion annually 6 years ago.30 This is about equal to what farmers paid for pesticides in the same year. Over ten years ago, the Economic Research Service of the USDA projected annual costs of implementing a groundwater monitoring program to protect citizens from pesticide-contaminated water at about $1.3 billion.31 This estimate does not include the costs of clean-up or prevention. Out of the $175 billion spent by American farmers to grow our food in 1996, nearly $20 billion went to the agricultural chemical industry. Chemical fertilizers accounted for about $11 billion and pesticides about $9 billion. If, on average, a sales tax of 5 % were collected on that $20 billion, about $1 billion per year could be made available to address problems created by the use of these chemicals.
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