Gov. Gray Davis has promised he would sign the ag tax package.
The package, included in the state’s $101 billion budget, is considered the biggest political victory for California farmers and ranchers since the defeat more than a decade ago of the Big Green Initiative, which would have severely restricted the use pesticides in the state.
“This tax relief package is a dollars and cents issue that will give immediate relief to a struggling California agricultural economy. Big Green was a philosophical issue that would have had a big impact had it passed, but this comprehensive tax relief for production agriculture is immediate and positive,” said Joel Nelsen, president of California Citrus Mutual, one of the political architects of the package that:
Permanently eliminates the state sales tax on farm equipment, parts, service, rental and leasing beginning next month.
Permanently eliminates the state sales tax on diesel fuel used for agriculture immediately.
Permanently eliminates the sales tax on agricultural propane sales.
Funds a $5 million “Buy California” consumer education program.
“When a farmers now buys a $65,000 swather, he will no longer be required to pay $3,000 in state sales tax and he will save $4,000 in taxes on the diesel used to operate the machine,” said Jeff Huckins, chairman of the Far West Equipment Dealers Association’s government affairs committee who has been working for a decade to eliminate the sale tax on farm equipment.
California now joins 38 other states that exempt farm equipment from state sales taxes.
“The provisions of the tax relief package are not commodity specific or geographically specific, but will help all farmers big and small regardless of where they farm in California,” said Huckins.
The package was lobbied hard to both houses of the California legislature by a new agri-coalition that includes California Cotton Growers and Ginners Association; California Rice Growers; Citrus Mutual; Nisei Farmers League and the Far West Equipment Dealers along with nurserymen and the seed sales industry.
“I think we were successful because this new coalition is far more aggressive than agriculture has been in the past,” said Nelsen. “Ag is always explaining the impact of this law or that law.
“Economic times are too hard today for farmers not to be as aggressive and tenacious as we can,” said Nelson. “Not since Big Green has agriculture drawn a line in the sand like it did on this ag relief package.”
The president of Citrus Mutual believes “most legislators in Sacramento want to do the right thing and when we presented them with the facts and figures of what these taxes are doing, it made sense.
“I don’t think most of them knew that consumers do not have to pay sales taxes on propane yet agriculture as an industry was required to pay sales tax on propane,” said Nelsen.
“We walked the halls…everyone worked hard…talked to those on both sides of the aisle and laid out the facts. That is how we got support,” said Nelsen.
“And, this new coalition is going to be a lot more visible from now on not only in Sacramento, but Washington as well,” Nelsen said.