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Chapter 151, Sec. 151.316 of the Tax code lists agricultural items that are exempt from the sales and use tax for persons "engaged in the production of agricultural products or timber for sale or in an agricultural aircraft operation as defined by 14 C.F.R. Section 137.3" (Sec. 151.1551).
A sales tax on manufacturing equipment, or goods and services used in the manufacturing process, would represent an additional cost for a producer. This cost would be taken into consideration in pricing the final product, which in turn would be taxed again, increasing the price for final consumers.
In order to avoid this situation, manufacturing equipment and goods or services used in the manufacturing process of other products for sale (here, agricultural products or timber for sale), are exempt from the sales and use tax to prevent the final products from being taxed several times (as the sales and use tax will generally apply to the final products).
Senate Bill 140 would hence logically add GPS telecommunications services to this list of already exempted items in Chapter 151, when used "for the navigation of machinery and equipment exclusively used or employed on a farm or ranch in the building or maintaining of roads or water facilities" or in the production of agricultural goods.
It would keep the price of final agricultural products lower for the final consumer. It would also limit the impact of government on Texans by avoiding double (or more) taxation.
We approve Bill 140.