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Mississippi bill would impose sales tax on farm inputs

JACKSON, Miss. — House Bill 1710 garnered little attention, and as coffee shop talk would have it, the bill wouldn’t make it out committee. However, some of the most important pieces of Mississippi legislation weren’t supposed to make it out of committee either. On Feb. 21, the bill was referred to the House Ways and Means Committee; on Feb. 23 it passed the House vote; and on Feb. 24 the bill went to the Senate.

With dozens, if not hundreds of bills facing a March 1 deadline to live or die, HB 1710 was again expected to go away and many of the people potentially affected by the bill rested on their laurels and waited for the Senate to kill the bill—only that didn’t happen either. The bill was referred to the Senate Finance Committee, where it remains.

House Bill 1710 would remove the exemption for sales of certain agricultural products to those other than “bona fide” farmers. To date farmers have been exempt from the sales tax.

Simply stated, the bill would result in agricultural retailers and suppliers having to charge sales tax on seed, feed, fertilizer and other inputs to some people and not to others. The wording in the bill doesn’t define the criteria for a “bona fide” farmer or outline criteria for who would pay sales tax and who wouldn’t.

The bill also fails to guess how much money the recalled exemption might bring to the state in sales taxes.

The bill was first introduced in the House by Rep. Percy Watson of Forrest, Miss., who, according to the House roster, does not serve on the House Agriculture Committee. In fact, the bill has not passed through either the Senate or House agriculture committees.

According to Celena Fraider, a spokesperson for state Sen. Nickey Browning, who serves on the Finance Committee, the bill was not discussed on the March 1 docket, but because HB 1710 is now classified as a revenue bill it was given a deadline extension for debate and vote.

Janet Trotter, committee assistant for the Senate Finance Committee, said the bill has until March 15 to be discussed by the committee and make it back to the Senate floor for a vote.

The legislature, rather than enter into the debate over who should and shouldn’t pay sales tax, wrote into the bill that the Mississippi Cooperative Extension Service (more commonly known as MSU-Extension) would be the agency charged with issuing permits to “bona fide” farmers only after that organization decides who falls into that category.

The MCES, long-established by legislation as an educational agency with no regulatory authority, by the wording of the bill would be thrust into just that—a regulatory role. The wording of the bill would allow MCES personnel (county agricultural agents) access to farmers’ income tax and other related personal documents.

While no one within MCES is eager to put his neck out and question the legislature at a time when budget cuts are imminent, unnamed sources of authority did express their concern that their agency was not structured for such a responsibility and more than a little concerned at the possibility of having to be the bad guys who decide who continues to be exempt and who doesn’t.

Roger Campbell, a large-scale row crop and poultry farmer with operations in Lee, Prentiss and Itawamba counties, spent a good deal of Feb. 28 and March 1 on the telephone asking state senators that the bill be killed. In his own operation, he could see the legislation costing him $15,000 to $20,000 a year. Even if he qualified for an exemption, he believes applying for the exemption would be a paperwork-intensive process and the permit would carry with it an annual fee that he would be required to pay.

Keylon Gholston, current president of the Mississippi Seedsmen Association and first vice president of the Mississippi Agricultural Industry Council, opposes the bill and spent the first days of this week letting his voice be heard by senators and representatives.

“This bill, if passed, would limit tax exemption on agricultural products such as seed, feed and fertilizer to farmers. A farmer would have to buy a card that he would then have to present to agricultural retailers to get his or her tax exemption. We feel this would be an extreme burden to all agricultural retailers. We encourage farmers, agricultural retailers and others obviously affected by this legislation to contact their legislators and oppose this bill,” said Gholston,

Joe Camp, president of the Mississippi Ag Industry Council and manager of the Agriliance store in Baldwyn, Miss., expressed multiple concerns over the legislation. One, the legislation does not set the criteria for who remains exempt from sales tax and who doesn’t, and two, as a retailer, he will be forced to pay someone to keep up with the paperwork on sales tax collected from non-exempt customers and to verify exemptions of others.

“No farmer or anyone producing food and fiber for this country at a time when that production is tied so closely to our future and to our national security should be forced to pay additional taxes. The margin of profit is already slim in most years and non-existent in others,” said Camp.

Campbell, Gholston and Camp also are concerned that adjoining states do not charge sales tax on these farm inputs and that regulating purchases by Mississippi farmers who might consider going to other states for their purchases would only be an added expense to the regulatory agency that ends up enforcing the legislation.

According to the legislation, once it is determined that an applicant is a bona fide farmer, the MCES issues the applicant a numbered farmer’s permit. The tax levied would not apply to gross proceeds of sales to a bona fide farmer of lint cotton, seed cotton, baled cotton, whether compressed or not, cottonseed and soybeans in their original condition, seeds, livestock feed, poultry feed, fish feed, fertilizers, defoliants, insecticides, fungicides, herbicides, baby chicks used in growing agricultural products for market, bagging and ties for baling cotton, hay baling wire and twine, boxes, bags and cans used in growing or preparing agricultural products, ice to commercial fishermen purchased for use in the preservation of seafood or to producers for use in the refrigeration of vegetables for market.

Also exempt by bona fide farmers would be the gross proceeds of sales by producers of livestock, poultry, fish or other products of farm, grove or garden when the products are sold in the original state or condition of preparation for sale before the products are subjected to any other process within a class of business or sold by a producer through an established store and the sales of mules, horses and other livestock.

The gross proceeds of sales or income derived from grading, excavating, ditching, dredging or landscaping activities performed for a farmer on a farm for agricultural or soil erosion purposes will be exempt only if the person receiving the services has a permit.

The gross proceeds of sales of all antibiotics, hormones and hormone preparations, drugs, medicines and other medications including serums and vaccines, vitamins, minerals or other nutrients for use in the production and growing of fish, livestock and poultry by whomever sold will be subject to sales tax, again, unless the person buying has been determined to be a bona fide farmer.

The most noticeable documentation lacking from the bill as it was sent from the Senate body to the Senate Finance Committee is a lack of projections as to how much revenue such a change might bring to the state. And, until the criteria for who pays sales tax and who doesn’t are established, there is no way to predict that income.

House Bill 1710 and its path through the Mississippi Legislature is documented and regularly updated on the Mississippi Legislative Web page at:

Other information on the bill and the response from the agricultural sector may also be found at

Eva Ann Dorris is an ag journalist from Pontotoc, Miss. She can be reached at 662-419-9176 or [email protected]

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