The Georgia Agriculture Tax Exemption program (GATE) rules were only released in January but the impact of the rollout is already having a positive impact on Georgia farmers. The program is an agricultural sales and use tax exemption certificate issued by the Department of Agriculture that identifies its user as a qualified farmer or agricultural producer.
The program is the result of the 2012 Georgia House Bill 386, which offers qualified agriculture producers a sales tax exemption on agricultural equipment and production inputs.
The 2012 Georgia Legislature leaned on the research of an earlier tax commission in the drafting of Georgia House Bill 386, which took a look at the tax code for GA business that had not been reviewed since 1936. The Commission sought to define the tax code for business as sales tax on business income rather than expenses. Georgia farmers, in particular, decried the tax code at the time as putting them at a competitive disadvantage relative to their neighbors.
Prior to the passage of HB 386, only Georgia and one other Southeastern state still imposed sales taxes on energy. The impact was a loss of 111,000 jobs in manufacturing, natural resources, and mining expansion opportunities for existing and new industries from 2006 to 2010, alone.
“You want a tax code that has people making decisions based on economic realities and not on whether or not it is going to help them save on taxes”, explains GA Tech Professor of Economics Dr. Christine Ries. “Businesses should be basing [decisions] on basic prices, consumer demand, the technology available, not on what the taxes will be.”
It is still too early to determine the full impact of the new common-sense tax reforms for Georgia Agribusiness. The enthusiasm is palatable, however, for the “GATE Guys”, as some farmers have taken to calling the band of economists involved in researching the Georgia Agriculture Tax Exemption program. And economic freedom supporters look forward to the results as they come in, knowing the positive difference that pro-growth policies like HB 386 have had for jobs and economies wherever they are instituted.