PANNA: Millions Lost to Sales Tax Exemptions for Pesticides and Fertilizers in U.S.


Pesticide Action Network Updates Service (PANUPS)

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 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



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