Colorado Farmers Want Their Tax Break Back

DENVER (CBS4) - Colorado farmers want their tax break back. They're asking a tax exemption that was repealed last year to be restored. One lawmaker, who is also a farmer, is helping the effort.

Republicans promised to repeal the tax laws they dubbed the "Dirty Dozen." It's the first of many battles to come.

Rep. Jerry Sonnenberg, a wheat farmer from Sterling, says he's seen first-hand the impact of a sales tax on farm products like pesticides.

"One of our largest co-ops in Colorado -- northeastern Colorado --  it cost them millions of dollars," Sonnenberg said.

Sonnenberg says the tax may be generating revenue, but it's costing the state far more in lost business. He says farmers are not only crossing the border to buy pesticides from states that don't tax them, but hiring those out-of-state companies to apply the chemicals too.

"That's $6 an acre and doesn't take long to add up $6 an acre times 50,000 acres and you have a huge amount of business that just walked out of this state," Sonnenberg said.

Sonnenberg is offering up the first challenge to last year's so-called Dirty Dozen, a set of bills that repealed tax breaks for businesses like agriculture.

Ali Michaelson with the Colorado Fiscal Policy Institute told the ag subcommittee everyone needed to sacrifice.

"You're already facing challenge of finding $1 billion to balance the budget. Now is not the time to make this challenge more difficult by further decreasing revenue," Michaelson said.

But Sonnenberg argued farmers were being forced to pay the equivalent of a value added tax -- something no other business does.

"IBM doesn't get charged sales tax on motherboards or hard drives when they put a computer together," he said. "Now agriculture is now charged a sales tax on items it takes to put food on your table."

The ag committee agreed, voting unanimously to send the bill on to the House where it will likely pass. The real challenge will be in the Senate where Democrats hold the majority.

The legislative council says restoring the tax exemption for agricultural products will cost the state $1.3 million a year in revenue.