Farm bill to target oil, fencing taxes

February 09, 2001|By LAURA ERNDE

Farm bill to target oil, fencing taxes

ANNAPOLIS - Maryland farmers don't have to pay sales tax on farm equipment, but the exemption doesn't apply to two common farming needs - motor oil and fencing.

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A Washington County lawmaker wants to change that, arguing the state should do everything possible to help struggling farmers stay in business.

Del. Christopher B. Shank, R-Washington, appealed his case before the tax-writing House Ways and Means Committee on Thursday.

Shank admitted the tax break won't solve the larger problem of farms being sold for development, but said it's a small concession that will send a message that the state cares about agriculture.

"This is one way we can prove it to the farmers of the state," Shank said.

Shank said several of his constituents in southern Washington County suggested the legislation to him.

Farmers told him they are buying their motor oil and fencing in Pennsylvania, where they aren't charged sales tax, he said.

"People are voting with their feet here," he said.

The Maryland Department of Legislative Services estimates the tax break would cost the state about $450,000 in the first year, increasing to nearly $500,000 by 2006.

Lobbyists for the Maryland Farm Bureau and Maryland Retailers Association testified in favor of Shank's bill.

"It's a fairness issue," said Farm Bureau spokeswoman Valerie Connelly.

Although no one spoke against the bill at Thursday's hearing, it faces an uphill battle in the legislature.

The reason the state doesn't exempt motor oil and fencing is because they are products that are not solely for farm use.

"It's a question of trust and I trust them. They're not going to take advantage," Shank said.

The high cost of the tax break is another factor weighing against the proposal.

Shank argues that it's a small price to pay to help farmers. For the last decade, the state has been spending about the same amount to preserve farmland in Washington County.

According to the state's estimates, the number of farms will continue to decrease in the next five years, from 11,788 farms to 10,652 farms.

The average farm will spend $258 for oil and $517 for fencing in 2002, state analysts say.

Shank's bill has been cross-filed in the Senate by Sen. Christopher J. McCabe, R-Howard/Montgomery.

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