Horse industry will push for tax reform, including equine tax equity, as top legislative priority


Supporters of Kentucky’s $4 billion horse industry will hoof it to Frankfort next legislative session intent on getting an equine sales tax equity bill passed into law.

“Most everyone agrees that Kentucky is long overdue for tax reform, and we’ll make a strong case for including equine tax equity as part of any reform proposal,” Joe Clabes, Executive Director of the Kentucky Equine Education Project, or KEEP, told the Interim Joint Committee on Agriculture. The KEEP Board of Directors in July approved a resolution calling for equine sales tax equity and made the matter its top legislative priority for 2016, said Clabes.

KEEP

At issue is how horses are classified for tax purposes, according to KEEP Board member Frank Penn who owns Lexington’s Pennbrook Farm. Kentucky tax law treats horses as companion animals—not production, or work, animals. That distinction, Penn said, prevents horse operations from benefiting from sales tax exemptions they need.

“I never saw anybody take their horse to McDonalds. They don’t take them home with them; we’re not companion animals,” Penn told the committee.

Recent attempts to get sales tax breaks for property used in equine production through the General Assembly have failed. That includes 2015 House Bill 220, a measure sponsored by Rep. Ryan Quarles, R-Georgetown, who is currently the state’s Agriculture Commissioner-Elect. HB 220 would have exempted horse feed, water, farm machinery and other items used in equine production from state sales and use tax.

“It’s not fair, nor is it equitable, nor is it right to pay six percent sales tax on the inputs to raise a horse, let alone the equipment that we buy to operate a horse farm,” said Penn. “All you do is drive those implement dealers in bordering states to make a sale.”

Sen. Robin Webb, D-Grayson, who owns horses and is involved in Walking Horse associations, told KEEP it can rely on her support. Equine tax parity goes beyond tax fairness, she said.

“It’s very important to protect our industry, to protect our horses from legal, regulatory and other standpoints to have this parity in statute. So I commend you and I’ll help you anyway I can,” she said.

Agriculture Committee Co-Chair Sen. Paul Hornback, R-Shelbyville, thanked KEEP for the presentation with some parting words.

“Maybe we can get some tax modernization done in Frankfort,” he said.

From Kentucky Equine Education Project (KEEP)


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