When it comes to job growth and strengthening the economy, competition among states, cities and counties can be fierce. Tax benefits galore are laid at the doorstep of would-be business growth, and it’s no different for farms and agribusinesses that must survive and thrive to grow, process, pack and deliver food and other products.
Georgia’s agricultural and forestry industry has a strong history and remains vibrant today partly because of investments made by state and local governments. While many Georgia fields are empty after harvest, farm families and communities benefit from the reduced tax burdens.
In 2011, lawmakers established the Georgia Agricultural Tax Exemption (GATE) program and prescribed how operations must qualify to get the sales tax exemptions on these farm inputs.
GATE, administered by the Georgia Department of Agriculture, consists of a 10-step application. Each step must be followed correctly, or it flags the account and hurts the applicant’s chances of approval. If you don’t qualify, you don’t get a card. Penalties for perjury are stiff.
Most farm-use items have been exempt from sales taxes for many years. The new program, however, added exemptions to include all areas of Georgia’s agricultural industry. GATE includes farm equipment parts and the fuel used in tractors and other machines. Energy used by those processing farm products, such as cotton gins, was added to help ensure these energy-intensive agribusinesses remain competitive in the global marketplace.
Like all tax exemptions, GATE does have a cost. Some county and city governments feel it more than others. Unfortunately, some counties taking action to increase property taxes make GATE the scapegoat.
The exemption is “extremely important to production agriculture,” says Terrell Hudson, a multi-generation farmer in Dooly County. He has rare insight: He’s also the county commission chairman.
Metro Atlanta is seeing property tax increases, even though GATE barely moves the needle here. Clearly, local economic factors drive authorities to adjust local taxes. But hiking property taxes and blaming it on sales tax exemptions for agriculture — many that have been in place for decades — is mostly political cover.
Agriculture knows no state boundaries. Agricultural retailers also serve customers and compete across state lines. There is nothing new about sales tax exemptions for out-of-state farmers. It’s important to keep neighboring farmers’ dollars coming to Georgia.
Out-of-state farmers, too, must obtain a GATE card to obtain sales tax exemptions. Without GATE, much of the revenue wouldn’t come our way, pushing Georgia ag retailers and the communities they support to the brink.
Keeping up with GATE rules can be challenging for both farmers and ag retailers. The agribusiness community has worked overtime to help farmers and retailers understand the limits of the program. Agribusiness groups have led education efforts and worked successfully with lawmakers and ag officials to fine-tune the program and close potential gaps. Department of Revenue oversight will also strengthen the program and encourage compliance.
Georgia agriculture has steadily grown. Lawmakers have shown their willingness to support this state’s largest and strongest economic sector. All signs point to an even brighter future for agriculture and forestry across our state. While sweat and tears will always be part of production agriculture, local economies should be open to GATE — because empty fields and idle tractors will never grow an economy.
Bryan Tolar is president of the Georgia Agribusiness Council.
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