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Soybean growers discuss gas tax, policies

Tuesday, October 30, 2012

In an effort to receive feedback about resolutions being proposed at the state and federal levels, the Iowa Soybean Association met with area farmers in Spencer Monday evening for the 2012 District 1 Policy Conference.

At the state level, taxes were a hot topic, starting with talk of a potential fuel tax increase, which the ISA leadership is considering supporting in an effort to cover about $180 million of a $220 million infrastructure shortfall.

The formula for that funding allocates 47.5 percent of the $443.8 million estimated funds to primary roads, 24.5 percent to secondary roads, 20 percent to city streets and 8 percent to farm-to-market roads, with 1.75 percent paid to local governments to allocate.

"When you look at the formula, we have lost ground," said Jill Altringer, an ISA lobbyist. "Realistically, we won't be gaining ground. Everyone reps the same number of people. There are more people near cities like Des Moines and less people up here. The chances of going further than the first formula are very slim."

ISA is supporting a continuation of that formula while considering whether or not to fully support a fuel tax increase, which funds the constitutionally protected Road Use Tax Fund.

Currently, diesel and biodiesel are taxed at 22.5 cents per gallon, gasoline is taxed at 21 cents per gallon, all ethanol blends are taxed at 19 cents per gallon and off road diesel is not taxed. A 10 cent-per-gallon increase on all types of fuel has been discussed.

The ISA is not supporting an increase on biodiesel because it is already taxed at a higher rate than ethanol blends. Off road diesel would remain tax free under ISA proposals. At the same time, ISA supports "biodiesel's inclusion in the advanced biofuels category of the Renewable Fuels Standard, ramping up to 1.28 billion gallons or more in 2013."

"A tax increase is always difficult," Carol Balvanz, ISA director of policy, said. "It has been a priority the last three years. The need is definitely there."

Arguments for an increase include the facts that 78 percent of Iowa's 114,000 miles of roads are rural, a 10 cent increase would cost a 15,000 mile-per-year driver $68 per year, 20 to 25 percent of fuel goes to out-of-state drivers and the fuel tax has not been increased since 1989.

Altringer believes Gov. Terry Branstad would sign a fuel tax increase, which the majority of those at the meeting supported, if it is a part of overall tax reform.

"Our concern is tax shifting from commercial (taxpayers) to residential (taxpayers)," Altringer said, reminding those present that commercial and agricultural property taxes have been tied together since 1978.

She added that it will be difficult to correct a tax shift without affecting taxpayers or local governments.

In terms of environment and natural resource policies, ISA opposes expansion of Environmental Protection Agency regulatory authority beyond navigable waters, supports an agricultural exemption from dust regulation and is in favor of including cost-benefit analysis of rules and regulations' effects on agriculture.

ISA supports an estate tax exemption of $5 million per individual with a 100 percent spousal exemption, with a maximum tax rate of 30 percent for small businesses, as opposed to reducing those numbers to $1 million and 55 percent.

"Rep. Bruce Braley and Sen. Tom Harkin talked about encouraging young people to be farmers," Balvanz said. "We said, '$1 million is not much land,' and they said, 'We have a huge deficit and have to pass it to people with the ability to pay.' I couldn't believe it."

ISA members also raised concerns about genetically modified organism labeling on the ballot in California and new, federal school lunch guidelines.

Those issues will be taken into consideration by the ISA resolution committee prior to the statewide ISA meeting.

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