A Tax on Efficient Irrigation can be Costly to Farmers in Louisiana

Naveen Adusumilli  |  11/15/2016 9:37:37 PM

Agricultural producers have historically been exempted from tax on the purchase of poly roll tubing, which is used for farm irrigation, and on the purchase of off-road diesel fuel, which is diesel purchased for farm operations. Recent legislation passed a tax on poly roll tubing and off-road diesel fuel. The tax rate for poly roll tubing is 5% starting April 1, 2016, to June 30, 2016, and 3% from then on until July 1, 2018, and the tax rate for diesel fuel is 1% starting April 1, 2016, until July 1, 2018. The two statutes are presented in the table below.

StatuteDescriptionFY 2015-16* tax rateFY 2016-2018 tax rate
LA R.S. 47:305.37Sale of Diesel fuel, Butane, propane , or other liquefied petroleum gases used for farm purposes1%1%
LA R.S. 47:305.63Sale of poly roll tubing used for commercial farm irrigation5%3%

*Fiscal Year (FY) is July 1 - June 30.

More than 75% of the irrigated acres in Louisiana are watered by polypipe. As a result, the tax on poly roll tube is expected to affect a great number of farmers. Presented in the attached document is the economic impact of these legislative changes on the overall net returns.

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