This week, the Mississippi House of Representatives passed House Bill 1439 that proposes to raise the sales tax on farm tractors and parts, farm implements, and tree farming equipment from 1.5% to 4%. Dairies will see an increase of 2.5% to their supplies for farm buildings. This increase, along with an increase to almost all sales tax, was done to recoup lost revenue from the bill’s elimination of the state income tax and reduction of the grocery tax by 50%. HB 1439 was introduced on Monday, February 22 and was passed out of the Ways and Means committee that same afternoon before passing the full House on Tuesday. HB 1439 was introduced, approved by committee, and passed the full House all within a 36 hour window.

Farm Bureau was made aware of the bill Monday afternoon, and we began talking with legislators, House and Senate leadership, the Commissioner of Agriculture, and the Governor’s office about the bill. Farm Bureau policy reads:

We believe that all raw materials (inputs) which are utilized in the process of agricultural and forestry production should be exempt from all sales taxes. Farming and logging machinery (tractors, cotton pickers, combines, farm implements and attachments, poultry equipment, forestry and logging equipment, and all replacement parts for the above) should be taxed at the same general tax rate as manufacturing machinery, at a rate not greater than 1.5%. Taxation 101, lines 1-8, page 1.

Our staff continues to research the bill, and its effect on Mississippi’s number one industry – AGRICULTURE. There are some things we do know already. If this legislation passes in its current form: a new tractor’s costs could increase by over $8000, and a new cotton picker’s cost could increase by over $18,000. Poultry and livestock producers will see a 2.5% increase on any equipment and parts. In a large row crop operation, this equates to an annual increase of $75,000, or as much as the salary of two farm employees.

As this legislation moves to the Senate, we will continue monitoring this legislation’s impact on farmers, ranchers, rural Mississippians, and Farm Bureau members.