Local farmers are angry at democratic gubernatorial candidate
Phil Angelides for floating the idea of repealing a $100
million-a-year tax break on farm equipment.
Gilroy – Local farmers are angry at democratic gubernatorial candidate Phil Angelides for floating the idea of repealing a $100 million-a-year tax break on farm equipment.
Angelides first raised the issue in 2004, when the state’s economy was in worse shape. But the state treasurer has more recently asked a panel of campaign aids to reconsider pulling the “tractor tax” exemption and closing what Angelides sees as other “corporate loopholes.”
Seizing the moment to marshal agricultural communities, Gov. Arnold Schwarzenegger’s campaign and the California Farm Bureau Federation staged “rallies” throughout the state Monday – including one in Gilroy, at Coastal Tractor on Chestnut Street. Gilroy City Councilman Dion Bracco joined local agriculture business owners at the event to discuss what they say are negative aspects of the proposed tax increase.
Morgan Hill farmer Tim Chiala, who uses the tax break to save money on more than 7,000 gallons of diesel fuel each year, said new technologies and cheaper labor costs makes farming a global business. So, getting a deal on sales tax at home is needed to keep family farms competitive in the market place.
“This kind of tax relief helps farmers,” Chiala said, adding 97 percent of California farms are family-owned, even if larger ones like his are incorporated for insurance reasons. “People always think farmers are competing against the guy down the street. But we’re really competing against Mexico and China.”
Bracco said ending the sales tax break – which was implemented in 2001 – would hurt shoppers.
“The consumer pays the tax, no matter who they raise it on,” Bracco said.
Al Parolini, owner of Coastal Tractor, said some of his tractors cost more than $100,000. The tax break saves farmers more than $5,000.
“If you repeal the tax break, you’ll hurt the economy,” Parolini said, adding he thinks some farmers would skim on labor costs or shop for equipment out-of-state if the tax is reinstated. Currently, 39 states do not collect sales tax from farm purchases.
