Millions Lost to Sales Tax Exemptions for Pesticides and Fertilizers in
U.S.
July 9, 1999
Friends of the Earth and a group of consumer, farm and environmental
organizations have called upon officials in 29 U.S. states to eliminate
exemptions from their state sales taxes for agricultural chemicals such
as pesticides and fertilizers. According to a report released by the
groups, the states lose at least US$674 million each year as a result of
the exemptions -- money they say should be used to support family
farms, sustainable agriculture, and conservation education.
The report, "Fair Agricultural Chemical Taxes: Tax Reform for
Sustainable Agriculture," shows that 29 of 50 states exempt agricultural
chemicals from state sales taxes. The ten states losing the most
potential revenue are Minnesota (US$65 million); Texas (US$62
million); Illinois (US$59 million); California (US$54 million); Florida
(US$50 million); Indiana (US$45 million); Washington (US$36
million); Kansas (US$36 million); Ohio (US$35 million); and Missouri
(US$27 million).
The report highlights health and environmental problems caused by
over-reliance on pesticides and fertilizers in agriculture. For instance, in
Dane County, Wisconsin, over one third of rural well water is
contaminated with nitrates making it unsafe for infants to drink.
Nationwide, health and environmental costs as a consequence of
pesticide use alone are estimated to be about US$8 billion per year.
Commercial fertilizer use has doubled since 1960, growing from 25
million to 53 million tons in 1996. Agricultural nitrogen use increased
four-fold from under three million to about 12 million tons during that
time. Conventional agricultural pesticide peaked in the early 1980s and
leveled off in 1996 at about 771 million pounds of active ingredient --
or about twice the amount used in the early 1960s.
Of the US$175 billion spent by U.S. farmers to grow crops in 1996,
nearly US$20 billion went to the agrochemical industry. Chemical
fertilizers accounted for about US$11 billion and pesticides about US$9
billion. The report maintains that if an average sales tax of 5% were
collected on these sales, about US$1 billion per year could be made
available to address problems created by the use of these chemicals.
The report suggests a wide range of options for state officials to tailor
sales tax revenue to their state's needs including:
* Property tax relief: reducing property tax assessment rates on
farmland;
* Estate tax relief: supporting successful hand-off to the next
generation of farmers;
* Cost-sharing programs: creating or augmenting state-level programs
that pay farmers to implement environment-friendly farming practices;
* Incentives for transition to non-chemical alternatives: providing
funding to help farmers make the transition to organic.
The "Fair Agricultural Chemical Taxes" (FACT) report as well as a set
of state profiles is available on the web at http://www.foe.org/fact.
Copies of the report are available to the public for US$10. Call Friends
of the Earth at 202-783-7400 and ask for the Publications Office.
Source/contact: Larry Bohlen, Health and Environment Programs,
Friends of the Earth, 1025 Vermont Ave NW, Suite 300, Washington
DC 20005; phone (202) 783-7400 x251; fax (202) 783-0444; email
lbohlen@foe.org.
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