Gilroy – Local farmers are angry at Democratic candidate for governor 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 said he’d convene a panel of financial aides if elected governor 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 on 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 how the tax increase would affect them.
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 overseas 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, sells some tractors for more than $100,000. The tax break lets some customers save more than $5,000 on those big customers.
“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 on farm purchases.
Angelides spokesman Brian Brokaw says his boss has other plans to lower taxes on small businesses, including family farms, with less than 50 employees. Angelides’ proposal, he said, could save small farmers up to $5,000 per year by exempting the first $500,000 of tangible business personal property from taxation.
As for the rallies, Brokaw said Republicans were engaging in “smear tactics.”
Tony Burchyns covers Morgan Hill for The Times. Reach him at (408) 779-4106 ext. 201 or tb*******@*************es.com.
