In an effort to document agricultural chemical sales tax exemptions, Friends of the Earth — a founding member of the FACT Campaign — interviewed numerous staff of state departments of revenue and taxation, as well as legislative committee staff. Friends of the Earth gathered the available tax code articulating the exemption from each state, verified the sales tax rate, and requested estimates of the revenue loss attributable to this exemption. Some states officially determine revenue losses from tax exemptions in "Tax Expenditure Reports" every one or two years. Only nine out of the twenty-nine states provide official estimates for revenue loss due to the exemption for agriculture (Alabama, Florida, Illinois, Massachusetts, Ohio, Oklahoma, South Carolina, Nebraska, and Washington). States tend to lump the revenue loss from all agricultural tax exemptions together. Three states (Alabama, Massachusetts, and Washington) attempt to break down estimates into more detail; however, the data is not based on actual agri-chemical sale or use, and is not well documented. Therefore, current estimates of revenue loss from exemptions for agricultural chemicals proved difficult to collect. Next, we interviewed personnel from each state department of agriculture to gather actual pesticide and fertilizer use data in each state in an effort to estimate the losses of revenue and to verify the nominal registration and use fees. Because of inconsistencies in pesticide use data at the state level, we relied on the annual "Farm Production Expenditures Report" compiled by the National Agricultural Statistical Service (NASS) in each state for our estimate of pesticide sales. NASS randomly samples farmers and asks them to report their annual expenses in a wide range of categories. In general, states collect and compile fertilizer tonnage data annually and prepare extensive reports (although Wyoming, Alaska, and Maine do not). Each state reports its fertilizer tonnage data to the Association of Plant Food Control Officials (APFCO) for compilation into a report that is published jointly with The Fertilizer Institute.60 Although the data is based on actual fertilizer tonnage applied, it compares well to the "Farm Production Expenditures Report" estimates of fertilizer use, which gave us greater confidence in the utility of its farmer-reported data. For the sake of symmetry, we opted to use the "Farm Production Expenditures Report" for estimates of sales of both pesticides and fertilizer. State sales tax rates were verified by interviewing appropriate personnel in departments of revenue and taxation. The rate shown for each state is the baseline sales tax rate. In some states, localities may charge additional sales tax. Local taxes are not shown due to their wide variability. Removing local sales tax exemptions may generate additional revenue.
Table 1: Sales Tax Revenue Loss by State Derived from "Farm Production Expenditures 1997" Summary, Economic Research Service, National Agricultural Statistical Service, USDA, 1998. State that exempts only pesticides from sales tax: Nebraska States that exempt only fertilizer from sales tax: California, Wyoming, and Nevada States that apply sales tax to agricultural chemicals: Arizona, Arkansas, Colorado, Connecticut, Idaho, Iowa, Michigan, Mississippi, New Hampshire, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, West Virginia States that do not have sales tax as a revenue source: Alaska, Delaware, Hawaii, Montana, New Mexico, Oregon States that apply special nominal tax (.3-1.5%) on pesticides: (some of which applied funds to field research and education in sustainable agriculture) California (1.5%), Iowa (0.3%), & Minnesota (0.5%)   CONTINUE TO: < < PREVIOUS Page NEXT Page > >     [  Back to Top  ]   Home  |  Credits  |  Table of Contents  |  Footnotes  |  State Profiles  |  Contact