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Arizona Lawmakers Consider Dropping State Tax On Pesticides And Fertilizers

State lawmakers voted Monday to exempt farmers from having to pay sales taxes on the pesticides and fertilizers they use to grow food in Arizona.

The bill passed on a 32-28 vote in the full House, with proponents saying the measure allows farmers to run their business like manufacturers.

Under Arizona law, only the final transaction is taxable — not the raw supplies. Farmers said these chemicals are essential to producing food products, like how untaxed sheet metal is essential to building an air conditioning unit.

House Bill 2275 seeks to redefine what's taxable to specifically exempt a laundry list of chemicals ranging from fertilizers and insecticides to fungicides, soil fumigants, plant growth regulators and rodenticides.

But Rep. Mitzi Epstein from Tempe said that argument falls short.

"We don't eat the pesticides, the fungicides, the herbicides,'' she told colleagues. Instead, Epstein said these chemicals are much more like light bulbs purchased by the owner of a factory. "You need them to run the factory, but they're not a raw material.''

In response, Rep. Mark Finchem from Oro Valley said that ignores the role that these chemicals play in ensuring an adequate supply of food.

"The agricultural community has put everything they have into doing more with less,'' he said.

Finchem also argued that, right now, higher costs are passed along to consumers, effectively making the tax paid by farmers a tax on the poor.

Opponents said Arizona could lose up to $19 million in tax revenue and some worried the bill could encourage the use of more pesticides.

"We don't want more chemicals in our food supply,'' said Rep. Pamela Powers Hannley from Tucson, who told colleagues that one out of every 33 children born in Arizona has a birth defect. "I don't want to encourage this.''

HB 2275 is sponsored by Rep. Tim Dunn from Yuma — who is himself a farmer. Rep. Bob Thorpe said 47 other states have similar exemptions from sales taxes.

The measure will now go to the Senate.

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