AUGUSTA — A crisis of epic proportions has slowly been reducing the population and economy of rural Maine for the past 20 years. Lately, this crisis has picked up steam and is threatening the very nature of Maine’s rural culture.
That is why the Professional Logging Contractors of Maine and the Maine Farm Bureau are urging Maine lawmakers to approve L.D. 1481, which would exempt commercial farmers and loggers from paying sales tax on off-road fuel.
In the past eight months alone Maine’s forest products industry has suffered the closure or shutdown of three pulp and paper mills, four pellet mills and two biomass electric facilities. This, combined with rising costs, means Maine’s logging industry is struggling and could contract as much as 20 percent by this summer.
Meanwhile, Maine farmers are only averaging a net cash farm income of $20,141 annually, and the 8,200 farms across the state all have a need to be sustainable, not only on their land but also in regard to their finances.
Ten years ago, there were 344 dairy farms; five years ago, there were 304; today, there are 248. With a loss of about 100 farms over the last 10 years in the dairy industry alone, it’s clear that the road we are going down is tenuous at best.
Farming and logging have a great deal in common, notwithstanding the fact that they – along with fishing, the other “F” in Maine’s three legacy industries – have been part of the economy from the state’s beginning. Traditionally, farming and logging are family-based businesses handed down from generation to generation, but it is getting harder for them to remain viable as costs rise and profits fall. More and more are shutting down because they can’t remain profitable, and one cost for both industries that is minimizing profit is fuel.
Farmers and loggers predominantly use off-road diesel. In 2002, the average price of off-road diesel was 93 cents per gallon, and the state sales tax was 5 percent. By 2014, the average price was up to $3.51 per gallon and the state sales tax was 5.5 percent. This represents a 280 percent increase in cost from 2002 for both industries, whereby arguably they were paid less to produce more.
As fuel costs have increased, so has the cost for parts, equipment and supplies. These increases have severely limited capital reinvestment and business growth, forcing many businesses to downsize or close.
What have loggers and farmers received in return for this increase in cost and tax? Very little.
Adding insult to injury, manufacturing industries in Maine have been exempt from paying sales and use taxes for fuel used in production since this tax was created by the Legislature in 1951.
And in 2011, the 125th Maine Legislature provided commercial fishermen with a sales tax exemption for off- highway fuel used on commercial fishing vessels.
To this day, commercial wood harvesting and agriculture have never been given the same treatment.
Massachusetts, New Hampshire, South Carolina, Wisconsin, Vermont and other states with major timber and agriculture industries do not tax diesel fuel used off road. In a very competitive global economy, this puts Maine farmers and loggers at a disadvantage.
Maine is an ideal place for farming because of our rich soil, few pest species and an abundance of water. As droughts become more prevalent across the nation, Maine will be looked at as a destination to move and farm. We need to make sure that we are creating a financial environment for those new farms that is comparable to our physical environment.
Logging is an industry with a proud heritage in Maine that has provided good jobs to generations of Mainers while adapting its technology and practices to become an example to the rest of the nation. With more forested land today than it had in the 1950s, Maine is well positioned to become a leader in the global forest products industry, but the state must create a business environment favorable for that industry to thrive.
As the Legislature wraps up its work for the session, lawmakers shouldn’t forget L.D. 1481 and Maine’s farmers and loggers – or in the long run, Maine might have just one “F” rather than three.
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