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Agricultural operations in Washington State apply over 2 billion pounds of fertilizers and an estimated 37 million pounds of pesticides each year. The pesticide number is an estimate (from NCFAP) because there is no monitoring or tracking of pesticide use in Washington State.
The exemption was created in 1943 by the Washington State legislature to “assist an economically distressed industry.” The state Department of Revenue estimates the current dollar value of the exemption at about $50 million per year.
According to the Department of Revenue, agriculture receives 42 tax exemptions valued at over $300 million per year. These include property tax reductions of about $80 million per year, an exemption from the state business tax (the B&O tax), a fuel tax exemption for airplane fuel used during crop-dusting, and sales tax exemptions on a wide range of items ranging from pesticides and fertilizers to semen used for artificial insemination of livestock and (new in 2001) propane and natural gas used to heat structures that house chickens.
The tax exemption for pesticides and fertilizers stands out because of its negative implications for human health, farmers’ long-term financial health, and the environment. For details, see Learn More.
No. An anti-farmer proposal would have a wider target that included all the other tax exemptions mentioned above (not to mention the hundreds of millions of dollars in subsidy payments that Washington agricultural operations receive from federal taxpayers). Instead, we are targeting only one item. And we are dedicating the revenue to programs that will support farmers’ efforts to reduce their reliance on agricultural chemical.
Why? Because helping farmers by providing tax exemptions for pesticides and fertilizers is like helping poor families by providing food stamps for cigarettes. Ultimately, the question comes down to this: if you had tens of millions of dollars to spend each year on helping farmers, would you use that money to provide a sales tax exemption for expensive chemicals that are a health hazard, or would you use that money to fund programs to help farmers reduce their reliance on those chemicals?
Yes. The tax exemption only applies to pesticides and fertilizers used by farmers for agricultural purposes.
We are in the process of refining the proposal, so we are considering a number of different options. The most promising option so far is to eliminate the exemption for all farms except for small family farms. (Note, however, that the revenue would be used to help all farmers reduce their reliance on chemicals.) Small family farms make up almost 90% of the farms in Washington State, but the remaining 10% of farms control almost half of Washington farmland. Focusing economic incentives on these large and/or corporate farms would generate an estimated $20 million in annual tax revenue. For details on this and other revenue options, see Learn More: Policy Options.
The sales tax revenue collected on sales of pesticides and fertilizers to farmers will not go into the General Fund, but instead into a special Agricultural Pesticide and Fertilizer Reduction Fund. We are considering a variety of expenditure options for this fund, including refunding certification fees paid by organic farmers and creating a competitive grants program to fund participatory on-farm research and demonstration projects. The most promising option so far, however, is to establish a commission of farmers and others to oversee the fund. Their approval will be necessary to spend money from the fund, and their involvement will ensure that the money is well spent. For details on this and other expenditure options, see Learn More: Policy Options.
Yes. In 1991 the Netherlands—the world's third largest exporter of agricultural products, with 8% of the world market—set a goal of reducing pesticide use by 50% by the year 2000. R&D efforts, grants to farmers converting to organic production, and other programs resulted in a 40% reduction in pesticide use by 1995 and appeared likely to meet the 50% reduction target by 2000.
Another success story is Sweden, where pesticide use in the early 1980s was similar to that in Oregon (about 5,000 tons per year). In 1985 the Swedish government used a 30% sales tax on pesticides to fund reduction efforts, with an overall goal of reducing pesticide use by 50%. That goal was met in 1990—thanks in large part to research that showed that pesticides could be used effectively at much lower doses—and the government promptly set an additional 50% reduction target.
Yes. In 1987, the state of Iowa responded to widespread nitrate contamination of groundwater by imposing a small tax on fertilizers and dedicating the resulting revenue (about $1 million per year) to the Leopold Center for Sustainable Agriculture. In the ensuing years, the Center and other state efforts helped to reduce nitrogen fertilizer use by 12-15% relative to neighboring states while maintaining high crop yields. A 1991 Progress Review led by G.R. Hallberg concluded that these input reductions were saving farmers $50 million each year and that it seemed likely that additional efforts could produce annual savings of $100 million.
To our knowledge the legislature has never considered this. The legislative option is blocked by gridlock in Olympia and by opposition from pesticide manufacturers and other special interest groups.
No. It is, of course, true that the ballot initiative process can be corrupted by too much money or sidetracked by sound bites and misinformation, and it is true that initiatives are not guaranteed to produce the “right answer” all the time. But these limitations apply equally (if not more) to the process of electing politicians and passing legislation. Both initiative and legislative efforts are legitimate expressions in our democracy, which Winston Churchill called “the worst form of government except for all the others.”
In a nutshell, there are two options; both require sponsors to gather about 200,000 signatures. Sponsors of an initiative to the people (the most common type of initiative) must gather the required number of signatures between January and June; the measure then goes on the ballot in November and becomes law if it wins. Sponsors of an initiative to the legislature must gather the required number of signatures between March and December; the measure then goes to the state legislature during the next legislative session. The legislature can either (1) pass the measure, in which case it becomes law; or (2) do nothing, in which case the measure goes on the ballot the following November (i.e., November 2004 for initiatives begun in 2003); or (3) pass an alternative, in which case both the original measure and the legislature’s alternative go on the ballot the following November. For more details on the initiative process, visit the Secretary of State’s website.
Next year, 2004. Signatures would need to be gathered between January and June of that year to qualify for the November ballot.
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