Bulk purchases of compost and planting mixes now exempt from Sales & Use tax

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Bulk purchases of compost and planting mixes now exempt from Sales & Use tax

Thu, 07/03/2014 - 3:50am -- tim

Composting in Vermont received a boost in the last legislative session with passage of four sales tax exemptions that went into effect July 1, 2014. Provisions include exempting bulk purchases of compost, planting mixes, and manure from the Sales and Use Tax. Bulking agents to make compost, such as wood chips, are now also exempt from sales tax. Passed unanimously in the House as a stand-alone bill, these provisions were incorporated into the Senate’s Miscellaneous Tax bill.

The Composting Association of Vermont worked with farming advocates at Rural Vermont, Vermont Farm Bureau and NOFA-VT to address the tax on compost and planting mixes following changes to the tax code in 2007. These products were omitted from the list of farming inputs exempt from Sales and Use Tax. Further investigation by the House Committee on Agriculture and Forest Products identified other inconsistencies and inequities regarding the application of tax code for inputs to grow food and meet other public policy goals. The new exemptions rectify the inequity of taxing certain organic farming inputs when chemical inputs for comparable purposes are exempt.

 As noted in the purpose section of the bill, these tax policy changes are intended to help advance the composting sector as a step towards reaching the goals of Vermont’s Universal Recycling law (Act 148).

 The legislation also better aligns tax policy with other statewide policy goals. These include:

            • Farm 2 Plate – grow more food in Vermont for Vermonters; composting connects to 11 F2P goals

            • Genuine Progress Indicators – the health of our environment is a measure of our state’s well being

            • Local sources of energy – fertility; heat capture during the composting process

            • Job creation – for every one (1) job in landfilling there are  two (2) in composting.

            • Greenhouse gas emissions reduction

            • Improving water quality.

Act 174 codifies Sales and Use Tax exemptions for:

Clean high carbon bulking agents, as that term is used in the Agency of Natural Resources’ Solid Waste Management Rules, used for commercial or on-farm composting, and food residuals used for commercial or on-farm composting or on-farm energy production;

Compost, animal manure, manipulated animal manure, and planting mix when any of these items are sold in bulk. As used in this subsection, the term “sold in bulk” shall mean sold in a form that is not prepackaged, or sold in a packaged form in volumes greater than one cubic yard.

The law also codifies definitions for the terms: manipulated animal manure, perlite, planting mix, and vermiculite. 

For the full text of the bill see page 35 of Act 174 at: http://www.leg.state.vt.us/docs/2014/Acts/ACT174.pdf

Note: The Universal Recycling law (Act 148) passed in 2012, and includes a seven-year phased in ban on the landfilling of food scraps and other compostable residuals, such as leaf and yard debris, beginning in 2014.