Illinois farmers launched a last ditch effort to get Governor Blagojevich to rescind his proposed sales tax on agricultural inputs, as a key lawmaker joined forces with agricultural groups.
Senate President Emil Jones (D-Chicago) told local farmers last week at a restaurant in Virgina, Ill., that he opposed the governor's proposal to introduce a 6.25% sales tax on feed, seed, fertilizer and chemicals. The Chicago Democrat said if the governor included the tax in the state budget bill, that he would not allow it to be called for a vote.
Senator Jones said the ag sales tax would cause hardship for Illinois farmers and rural communities that outweigh additional revenue for the state. It's likely that instead of paying the sales tax, affected farmers would take their business to surrounding states, without this tax.
"Farmers are in the commodity business and as such they are at the whims of the market. They can not pass along increased costs such as this tax to end customers," said Ron Kindred, vice president of the Illinois Soybean Association (ISA) from Atlanta.
Illinois Corn Growers Association and ISA are partnering with the Illinois Farm Bureau in asking all Illinois farmers to voice their concerns to the new ag taxes by calling the governor's office, using a toll free number, 1-888-WHY-CORN (888-949-2676).
"Our organizations recognize the governor and the General Assembly are trying to address serious budgetary problems and although their motives may be good, this tax is not the answer. It won't have the desired effect. If anything, it will harm the state's economy and we will lose jobs in this state. We can't afford to wait until planting is done. This is real, it's urgent and needs to be addressed today," said Martin Barbre, ICGA president of Carmi, Ill.
"The sales tax incentive is intended for farmers with over $1 million gross sales, however it is expected to effect all farmers either directly or indirectly, regardless of size. Fertilizer, chemical, seed and feed suppliers operate on a 80-20 rule. On average, 80% of the total input sales come from 20% of their customer base. These larger, productive farmers are the target of the input tax and from a business standpoint they will be forced to purchase their inputs from suppliers who do not have to assess the sales tax. These suppliers can be found over the Internet or in of the five states that border Illinois," said Jean Trobec, president of the Illinois Fertilizer And Chemical Association, Inc.
"The only option for these Illinois suppliers will be to raise costs for their remaining customers or close their doors, driving millions of dollars in tax revenue to neighboring states and putting unfair economic pressure on farmers who still try to buy from local businesses. Making Illinois the only state without a tax exemption is bad policy for farmers and for the entire Illinois economy," Kindred said.
"This effort is not partisan and it's not personal. This is about business survival and profitability. Our members need to call from their tractors and help the governor understand the true impact of this tax on our industry," Barbre said.