Recently, I read an article about how Internet retailer Amazon is fighting tooth-and-nail to prevent some states from requiring it to collect taxes from its customers. At present, by law, Amazon is only required to collect sales tax from customers that live in states where it has a physical presence. It seems that with many state coffers being pinched by falling tax revenues, lawmakers are looking for any profitable companies that do any business in their states to pick up the slack.
This should serve as a warning to ag retailers. As has been pointed out time and time again this during the winter months, agriculture is “one of the bright spots in the nation’s economy.” While many business sectors are still recovering lost revenue and market share from the Great Recession of 2008 and 2009, agriculture has thrived. In fact, according to USDA estimates, farm income rose 24% during 2010 to $771 billion. Likewise, CropLife 100 retailers had sales topping $20 billion.
This is a huge, profitable pie. And I’m that many local, state and federal lawmakers are actively trying to figure out new ways to tap into it.
During the recent slate of winter trade shows and association meetings, I heard many speakers and attendees talking about all the activity targeting agriculture that is taking place on the regulatory front. Issues such as water quality, spray drift and transportation were often mentioned as key areas of concern. But virtually no one mentioned new tax effects.
But you have to believe these are coming. Despite an improving general economy, many states are still running multi-billion dollar deficits – and many of these are big agricultural states.
Right now, Internet-based retailers such as Amazon represent an easy target because going after them doesn’t threaten to derail any local economics in the process. However, if this gambit by lawmakers fails to get results, agriculture may end up as the next industry in the additional tax revenue cross-hairs because of its level of success.
If this happens, we should be ready for a significant fight.