Farmers throughout the state will soon be getting a break from the place many might least have expected it: the state of California budget.
The state budget, signed Thursday by Gov. Gray Davis, reduces the tax on farm equipment from about 7.75 percent to about 2.75 percent, although the actual rate depends on the city in which the equipment is purchased. That tax break will not only help the farming industry, which is huge here, but will help prop up our ag equipment industry, which is no small part of our economy in the Imperial Valley, either.
Farmers, Imperial Valley farmers in particular, have been struggling in recent years with bad to mediocre markets, relatively high costs of labor, the ramifications of the North American Free Trade Agreement, cumbersome regulations and more. The tax reduction will be one step toward farmers righting themselves financially.
While a simple sales tax reduction may not seem like a major thing, most farm equipment is tremendously expensive, and farmers will pay thousands of dollars less for most big pieces of equipment thanks to the tax cut. Such savings will prod more farmers to buy new equipment, which will help equipment dealers. And now the business for such equipment will stay in California rather than going to other states, 38 of which have no taxes on sales of farm equipment. No less money will be delivered to local cities as a result of the plan, since the tax reduction will come from the state's portion of the money, not the municipalities' in which the implements are sold.