A Publication of WTVP

April 1 marked the conclusion for farmers and landowners to establish yields and acreage for the new Farm Bill. It was a very busy winter for Farm Service Agency personnel, as they shuffled files and files of paperwork. Likewise, farmers were busy shuffling through their own papers to establish yields and make a multitude of decisions on specific farms and fields. Business has now shifted gears, as farmers set their sites on planting the 2003 corn and soybean crop.

On the legislative front, the Illinois Farm Bureau pledges to work with state legislators to address the state’s budget crisis in a way that maintains pro-growth tax treatment for agriculture and creates a climate for a strong economy across the state.

Farm Bureau thanked Gov. Blagojevich and members of the General Assembly for their commitment to maintaining the state sales tax exemption on feed, seed, chemicals, and farm machinery—worth $235 million to production agriculture.

The Analysis of Illinois State Business Tax Provisions released in early April clearly stated, “There is no sound case for applying the sales tax to agricultural inputs such as seed, feed, fertilizers, pesticides or farm machinery.”

The report further stated taxing agricultural inputs isn’t consistent with the basic approach of the sales tax as a consumption tax. It creates a number of inefficiencies, such as the cascading of taxes (taxes levied on taxes) and unwarranted incentives for the internal provision of inputs and vertical integration. The analysis was prepared for the Illinois Tax Foundation by Richard F. Dye of Lake Forest College; J. Fred Gietz, with the University of Illinois; and Therese J. McGuire of Northwestern University.

The key importance of these agricultural state sales tax exemptions is agriculture isn’t the end market. We’re the beginning of the food system, and the state sales tax purpose is to tax final tangible goods. The agricultural production sales tax exemptions reflect this, and therefore aren’t taxed because they’re the basics in food production.

The proposed fiscal 2004 budget for Illinois preserves $5 million for the Council for Food and Agricultural Research (C-FAR) and $400,000 for AgriFIRST, two important programs for Illinois agriculture.

The proposed budget would trim 8 percent from the Illinois Department of Agriculture budget. However, IDOA officials indicated they’ll still be able to fill vacancies in the meat inspection division caused by early retirement. It’s hoped the addition of meat and poultry inspectors will address the shortfall of employees currently seen in that program.
Given the state’s economic condition, the governor is making education a priority, boosting the foundation level by $250 to $4,810 per student, and preserving the school construction bond program.

A $4.8 billion shortfall is a huge hurdle to overcome. Everyone will have to be part of the solution. IBI