Maryland ag reps attack proposed sales tax bill

Staff Writer

ANNAPOLIS, Md. (March 10, 2015) — Maryland agricultural representatives protested last week a House bill that would repeal a sales tax exemption on agricultural products including livestock, seed, fertilizer and farm equipment, claiming it would harm the agricultural community and force their purchases to neighboring states.
If passed, the bill, sponsored by Prince George’s County Del. Jay Walker, D-District 26, would have a “disastrous” effect on the state’s agricultural community, which is already dealing with heavy economic pressures of its own, said Kurt Fuchs, government affairs officer at MidAtlantic Farm Credit, before the House Ways and Means Committee on March 3.
“It’s being imposed on a business that are traditionally price takers, not price makers,” he said. “Commodity prices have seen such a big decrease in recent years while expenses have stayed relatively the same.”
Lifting the exemption would generate about $212 million in tax revenue for the state, Walker said — money that could be redirected to schools, which have suffered significant, proposed cuts due to the state’s projected $421 million deficit.
“We have 12,000 farms in the state of Maryland,” he said. “We have 127,000 students in P.G. County.”
But that estimate falsely assumes farmers would continue to spend the same in Maryland if the exemption was repealed, said Valerie Connelly, executive director of the Maryland Farm Bureau.
Farmers would likely head to Virginia, Delaware and Pennsylvania to make purchases, including items that were never part of the exemption, she said.
Missouri is the nearest state without similar sales tax exemptions on ag products, she said, though Prince George’s County Del. Alonzo T. Washington, D-District 22, said Virginia has a series of taxes on some agricultural products such as fertilizer.
As an example, Fuchs said, a large grain farm with expenditures more than $1 million a year would likely take a $21,400 hit under the bill.
The $212 million in taxes also represents roughly half of the entire state’s net agricultural income of more than $400 million a year, Connelly said.
“It’s something our [farmers] simply can’t afford,” she said.
At least two committee members spoke against the bill though most listened to speakers and asked questions.
“Do you think it’s right to balance past budget woes squarely on the backs of farmers?” said Cecil County Del. Kevin B. Hornberger, R-District 35A.
“Absolutely not,” Connelly said.