Bill takes bite out of equipment tax


Struggling farmers are one step closer to catching a break at the cash register when they purchase new equipment.

House Bill 116 designed to eliminate sales tax on farm equipment was given approval by the House Finance Committee. If the bill is passed it will provide some sales tax relief for ranchers and farmers across Colorado.

The bill is sponsored by Representative Kay Alexander (R-Montrose) and Senator Marilyn Musgrave (R-Fort Morgan). The bill is a companion to House Bill 1002 which passed in 1999 making farm equipment including tractors, implements of husbandry and irrigation systems of at least $1,000 sales tax exempt. The more recent bill House Bill 1162 broadens the exceptions to all other farm equipment repairs and maintenance, regardless of price. The bill would also create a new sales and use tax exemption for all materials used for agricultural storage facilities.

The bill boosts the aid to farmers that according to representatives of the agricultural industry, comes at a much needed time.

"Farmers and ranchers are not sharing in the prosperity currently engulfing other sectors of the state's economy," said Roger Bill Mitchell, president, Colorado Farm Bureau. "This is one small way that we can make a difference for agriculture."

The original bill that was made a law in 1999 has already made a difference for local dealers and local farmers according to Burl McMillen, co-owner of Tri-State Equipment Company, a dealer in John Deere equipment.

"We have noticed a difference (since the bill passed)," said McMillen. "It has been a real plus for us as a dealer and more of a plus for our customers."

The average sale for Tri-State equipment Company is $20,000, according to McMillen. Eliminating the sales tax saves the buyer on average $600.

While that may not cause ranchers and farmers to rush out and start buying hundreds of thousands of dollars in equipment, it is having a noticeable side effect on McMillen's business.

"I feel like based on customer response they don't have a tendancy to look outside of their area. The big benefit of going to another state isn't there, which is less sales tax."

McMillen believes the equipment that has had the sales tax eliminated is vital to modern farming and ranching operations.

"It is vital because labor costs are high and are only going to get higher," said McMillen. "It is hard to even find good labor. This equipment eliminates the need for a lot of labor."

According to McMillen, the bill is a start at helping struggling farmers but when it comes down to it farmers and ranchers will have to rely on their on resourcefulness until things get better.

"These are some lean times," said McMillen. "It is sad to say but people in this industry have learned to deal with them and make it through them."

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