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Tax exemption repeals could cost Texas farmers millions

And a few items they’re considering could affect farm income. Of special interest are proposals that threaten tax exemptions, water rights and private property.

Tax exemption repeals pose the biggest immediate threat, according to Texas Farm Bureau officials and various commodity associations watching the proposals.

Currently, the Texas Tax Code provides favorable tax treatment to agriculture through sales tax exemptions and by taxing land used for agriculture based on the land’s productive value, not the market value.

Of significance is Section 151.316 of the tax code, which grants exemptions for agricultural items, including horses, mules, work animals, feed, seed, fertilizer, machinery and equipment to be used for agricultural purposes. Under proposals by state Rep. Yvonne Davis, D-Dallas, that section would be repealed if House Bill 578 passes muster.

Repeals are also proposed on exemptions for water, timber items, gas, electricity and agribusiness items.

House Bill 589, also filed by Davis, would repeal all sales tax exemptions allowed to Texans, including the ones mentioned above. It would eliminate taxable property exemptions for residence homesteads, farm products, implements of husbandry (tractors, combines, center pivots, etc.), charitable organizations, and religious organizations.

Rep. Ron Wilson, D-Houston, filed House Bill 480 that would limit exemptions on land that may qualify for agricultural use, open space, and timberland. Land located inside the corporate limits of an incorporated city or town having a population of 500,000 or more would not be eligible for an agricultural, open-space or timberland designation.

The Texas Farm Bureau will oppose all three of those bills.

“All three have been referred to committee,” says Farm Bureau spokesman Warren Mayberry. “These proposals pose the biggest potential impact on farm income of anything we’re watching so far this legislative session,” he said. “We’re taking them seriously and keeping close watch on them.”

Potential impact is $1.6 billion. “That’s the amount currently exempted,” Mayberry said. Considering the Texas agricultural economy is estimated at $3.2 billion, the tax exemption repeals would in effect cut farm income in half. The bills also would affect other manufacturers.

TFB also opposes a bill that would impose restrictions on exportation of groundwater from rural counties. Under House Bill 423, proposed by state Rep. Wayne Christian, a person pumping groundwater from a county with a population of less than 50,000 would need a permit from the Texas Commission on Environmental Quality to increase the amount of groundwater transferred or to begin a new export of groundwater.

Texas Farm Bureau officials say the organization opposes any state control over groundwater and will oppose the bill.

TFB also notes that two bills, HB 140, filed by Buddy West, R-Odessa, and HB 334, filed by Mike Villareal, D- San Antonio, would expand authority of county governments and give them control over private property through ordinance and building codes.

TFB says HB 140 represent a “complete departure from current law where counties have very limited authority. The county could prohibit any number of activities on private property under West’s bill.”

HB 334 requires counties to adopt and enforce building and rehabilitation codes. The legislation would target residential growth occurring in a county, outside city limits. The bill does not limit the county’s power just to residential structures in subdivisions and would allow the county to apply the code to any type of structure on any type of land.

TFB officials say they will work with Villareal to amend the proposal to apply only to residential housing in platted subdivisions. If the bill is not amended, Farm Bureau will oppose it.

Billy Howe, who keeps up with water legislation for TFB, says recent court decisions favoring a city over a farmer who sued for just compensation for groundwater value after his property was condemned as part of an Imminent Domain procedure, has prompted TFB to seek legislation to protect a property owner’s water rights.

‘We hope to get a bill through this session,” he said.


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