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Agribusiness

Farm Tax Exemptions Are Investments in Georgia’s Economy by Bryan Tolar

Category: Agribusiness

Coastal Empire News Special Report

By Bryan Tolar

Editor’s Note: Bryan Tolar is president of the Georgia Agribusiness Council, a trade association representing over 875 member businesses in Georgia.

February 18, 2015 – When it comes to job growth and strengthening the economy, competition among states, cities and counties can be fierce. Tax benefits galore are laid at the doorstep of would-be business growth, and it’s no different for the farms and agribusinesses that must survive and thrive to grow, process, pack and deliver food and other products.

Georgia’s agriculture and forestry industry has a strong history and remains vibrant today, in part, because of investments made by our state and local governments. While many Georgia fields are empty as the new crop season nears, farm families and communities across the state continue to benefit from the reduced tax burdens on farmers.

Agriculture and forestry are input-intensive. Enormous amounts of equipment, seed, nutrients, fuel, sweat – even tears – go into a successful crop.  Of these, all but sweat and tears would be subject to sales tax. Georgia lawmakers, aware of the substantial impact that farm and agribusinesses success has on the rural economies they serve, worked to reduce the sales tax burden on these operations.

In 2011, with the recommendation of the Governor’s Tax Council, lawmakers established the Georgia Agricultural Tax Exemption (GATE) program and prescribed how operations must qualify to get the sales tax exemptions on these farm inputs.

GATE, administered by the Georgia Department of Agriculture (GDA), consists of a 10-step application. While the online application process is user-friendly, each step creates additional barriers that the applicant never sees but GDA staff and data systems monitor continually.  Each step must be followed correctly or it flags the account and hurts the applicant’s chances of approval. If you don’t qualify, you don’t get a card. Penalties for perjury are stiff.

Most farm use items have been exempt from sales tax for many years. The new program, however added exemptions to include all areas of Georgia’s diverse agricultural industry. GATE includes farm equipment parts, farm use fuel used in tractors and other machines used in production. Energy used by those processing farm products, such as cotton gins, peanut shellers and poultry processors, was added to help ensure these energy-intensive agribusinesses remain competitive in the global marketplace. 

Like all tax exemptions, GATE does have a cost, and some county and city governments feel it more than others. Unfortunately, some counties taking action to increase property taxes are making GATE the scapegoat. A University of Georgia study released last week shows that the farm sales tax exemptions are not creating a revenue problem. The data from the Georgia Department of Revenue used in the study clearly rebuts such unfounded claims. Charts were put together showing statewide and county tax collection figures for the two years before GATE and the two years since the sales tax exemption program was put in law. The data shows that, while there are some minor county-by-county declines, average Georgia county sales tax revenues went up by 5.9%. (Click here for the study)

Agriculture knows no state boundaries: Agricultural retailers also serve customers and compete across state lines. There is nothing new about sales tax exemptions for out-of-state farmers. It’s important to keep neighboring farmers’ dollars coming to Georgia. These dollars keep ag retailers afloat and keep their workers on the payroll.

Out-of-state farmers, too, must obtain a GATE card to obtain sales tax exemptions. Without that, much of the revenue wouldn’t come our way, pushing Georgia ag retailers and the communities they support to the brink.

Whether selling livestock feed to farms in South Carolina or pine seedlings to foresters in Texas, Georgia agribusinesses need to maintain these sales tax exemptions or the dollars will go elsewhere.

Keeping up with GATE rules can be challenging for both farmers and ag retailers. But compliance is key, and the agribusiness community has worked overtime to help farmers and retailers understand the limits of the program. Agribusiness groups have led intense education efforts for the industry, working successfully with lawmakers and ag officials to fine-tune the program and close potential gaps. Department of Revenue oversight will also strengthen the program and encourage compliance.

(GATE guidance appears on the homepage of the Georgia Agribusiness Council Web site at www.ga-agribusiness.org.)

Anything worth doing requires investment. Georgia agriculture has steadily grown and lawmakers have shown their willingness support this state’s largest and strongest economic sector. All signs point to an even brighter future for agriculture and forestry across our state. While sweat and tears will always be part of production agriculture, local economies should be open to GATE. Because empty fields and idle tractors will never grow an economy.

 

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