HAY/COTTON WRAP AND TWINE EXEMPTION Priority: Support a sales tax exemption for wrapping and binding materials used with agricultural equipment. Bill # Background ARFB will seek a sales tax exemption for “expendable supplies” that will include hay wrap, twine and cotton bale wrap. Currently the law provides exemptions for tomato twine and certain cotton binding. The proposed legislation will update the tax code to match 21st century technology. A new exemption will also prevent shopping leakage to neighboring states. Many farmers now cross state lines to purchase these items taking all their trade. Farm Bureau is working to create an organized initiative to pass the bill. Several legislators have expressed interest in passing the bill. In the 2011 session, six bills were filed dealing with issue. The overall exemption has a price tag of $600-800 million. Comparatively this request is modest and for drought-impacted cattle and cotton farmers every little bit helps. It is far from a “done deal” and farmers need to alert their legislators that they support this legislation. Talking Points Legislation would update code to match 21st century technology expanding the antiquated code beyond cotton binding and tomato twine. Adopting this legislation will stop trade leakage into Oklahoma, Missouri and Texas where hay twine and wrap are exempted. Mississippi, Texas and Missouri law provides an exemption for cotton wrap and binding. Exemptions in neighboring states give their farmers a competitive advantage. These items are purchased annually as a normal business expense. Because of the economic structure for agriculture, there is little opportunity to pass on these costs to consumers. Farm Bureau Policy Taxes 153 We recommend the legislature extend the sales tax exemptions to include any item if it is strictly for agricultural use.
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