A bill sponsored in the Legislature by State Rep. Paul Lee, R-Dothan, aims to stop the erosion of farm equipment sales, jobs and revenue to adjacent states.
Lee met with equipment dealers outside the Houston County Farm Center in late December to bolster support for HB86, which would remove the 1.5 percent state sales tax from new and used farm equipment and parts. Sen. Tom Whatley, R-Auburn, agreed to sponsor the legislation in the Senate, SB69.
“Over the last several years, we’ve seen the states of Tennessee, Florida and Georgia remove their state sales tax on farm equipment,” Lee said. “We’re seeing people one, two and three counties deep all around those borders leaving our state to buy their farm equipment. Not only are we losing sales, we’re seeing the potential for people to lose their jobs.”
Alabama Farmers Federation State Legislative Programs Director for the House of Representatives David Cole said the tax exemption will help ensure farmers have access to equipment, parts and service when they need it most.
“At harvest time, a farmer can’t afford to drive hundreds of miles for repairs or wait days for a part,” Cole said. “This bill helps keep local equipment dealers in business so they can serve farmers, create jobs and generate revenue for our communities.” By supporting the sales tax exemption, Lee said Alabama can avoid losing millions of dollars in sales and jobs.
“We’re already seeing money leave,” he said. “Next, you will see these men closing their businesses, and people losing their jobs.”
Dewayne Williams, store manager for SunSouth in Dothan, said Alabama sales tax can range from about $1,000 on a tractor used for hay cutting to several thousand dollars for a combine, cotton picker or large, row-crop tractor.
“We lose deals over $200 on a $70,000 tractor, so when you start talking about $1,000 in sales tax, it’s easy for them to walk away,” Williams said.
Williams said it’s frustrating for his sales team to work hours to get the best possible price for a farmer only to see the customer go across the state line because of taxes.
Both Williams and Kyle Hardy, president of Wiregrass International in Headland, said the worst thing about the tax disparity is the loss of long-time customers.
“If we lose the sale of the tractor, that’s one thing,” Hardy said. “But if a person buys a tractor with a dealership across the state line, he builds a relationship, and then he goes there to buy his parts; he goes there for his repairs. We lose more than just the sale of the tractor. We lose the customer.”
Williams and other equipment dealers said the legislation could provide an economic boost to Alabama communities. SunSouth has 12 locations in Alabama, with 24 employees in the Dothan store alone.
“If we weren’t losing business, we could probably use three, four or five more employees,” Williams said. “It would be a win-win situation if we could get this bill passed.”
Glen Gulledge agrees. He recently sold Wells Tractor Co. to Atlantic and Southern Equipment of Dothan, where he works as a sales manager.
“Our goal is for this business to expand,” he said. “When we grow this business, we can go from 10 employees to 15-20 employees from this area.”
Henry County Young Farmers Chairman Kenny Woodham works for Atlantic and Southern and has 600 acres of cotton and peanuts as well as a 140 beef cows. He said the tax exemption helps his bottom line.
“It would mean more money in farmers’ pockets at the end of the year,” Woodham said. “It’s not a huge rate of tax, but when you consider the amount of money we spend every year, it adds up.”