Watch legislators debate HB10-1195 here. Source: State Bill Colorado
By Debi Brazzale, COLORADO NEWS AGENCY
A sales-tax break that was suspended earlier this year–prompting some Coloradans to cross state lines to buy farming and ranching products–will be given a second look by lawmakers when they convene in January.
The sales-tax exemption on agricultural compounds, pesticides and bull semen was scotched by lawmakers last spring at the prompting of Gov. Bill Ritter as part of a package of bills nixing tax breaks on a range of business activities. The legislation was intended to help bridge budget gaps amid slumping state revenue, but it was dubbed “the Dirty Dozen” by an angry business community and dissenting GOP lawmakers.
The ag sales-tax exemption had buoyed an array of products used by farmers and ranchers across Colorado, and its removal under House Bill 10-1195, was vigorously opposed by the agricultural community as well as most GOP lawmakers before it was passed by majority Democrats and signed into law by the governor.
Sterling farmer and GOP state Rep. Jerry Sonnenberg said today he will be sponsoring legislation to repeal HB 1195 as a matter of first priority.
“That’ll be my focus right off the bat,” said Sonnenberg.
The issues came up in a discussion at the Capitol at a hearing for the state Department of Agriculture before the budget-writing Joint Budget Committee. Rep. Cheri Gerou, a Republican from Evergreen who serves as Vice Chair of the committee, asked Commissioner of Agriculture John Stulp if he had heard any complaints from the agriculture community about the end of the sales-tax exemption. Stulp said he had, but he defended the move to curtail the exemption.
“It’s part of the governor’s message of a shared sacrifice,” said Stulp. The sales tax, while I might not like it, is a part of being a citizen of Colorado and contributing to the cause because I like to have good roads and I like to have good school systems.”
Sonnenberg said that the agriculture industry is the only industry in Colorado that is being taxed on products used for production.
“IBM doesn’t pay sales tax on motherboards or hard drives when they put a computer together, but now agriculture is being told that, ‘As you produce food, we’re going to tax part of your areas where you have a cost of production,’ ” said Sonnenberg.
Yet, the sales tax may have produced less-than-anticipated revenue, says Sonnenberg, who says he has observed a trend among farmers and ranchers of avoiding the tax altogether.
“The fact of the matter is many of them are going out of state to buy their chemicals and their feed additives,” said Sonnenberg. “What we did with that tax is hurt Colorado businesses, local co-ops, and chemical dealers–because they lost the sale.”
Stulp, a farmer and rancher himself, said he understands the dynamics at play.
“Farmers and ranchers are always concerned about their bottom line,” said Stulp. “We are the one industry that does not have the ability to pass the cost on. It’s one of the dilemmas in agriculture.”