Passage of State Question 766 is vital to Oklahoma farmers and ranchers, who could end up paying new property and business taxes if the voters were to reject it.
“Our state’s farmers have been hit hard in recent years with drought and the economic downturn,” said Oklahoma Farm Bureau President Mike Spradling. “The prospect of numerous new property taxes would make it difficult to recover from these difficult times.”
SQ 766 exempts all intangible personal property from ad valorem taxation. The ballot measure was necessary following a 2009 state Supreme Court decision which opened the door to widespread taxation of intangible property.
Examples of intangible property include brand names and logos, cooperative agreements, leases, water and land use rights, unused mineral rights, regulatory approvals and exemptions, supplier contracts and distribution rights.
In response to the court’s decision, the legislature created the business activity tax, or BAT, as a temporary fix.
“Farmers and ranchers, like many business owners, are concerned about the BAT because of all the paperwork it has spawned, and what it would become if SQ 766 failed,” Spradling said. “SQ 766 is a permanent fix to the court’s ruling, and it repeals the BAT.”
If SQ 766 fails, farmers and ranchers could be subject to a full-fledged gross receipts tax or another onerous new tax.
Farmers and ranchers would not be the only ones forced to dip into their wallets by the new tax.
“Everyone would be impacted because companies would just pass along any cost increases to the consumer,” Spradling said.
This is not the first time Oklahoma voters have been asked to exempt intangible property from taxation.
“Some of our members may remember voting to protect their intangible property from taxation in 1968,” Spradling said. “Because of the supreme court action, we must repeat our vote to protect intangible property from taxation, by voting ‘yes’ on SQ 766.”
Protecting farmers and ranchers from high ad valorem taxes has been a longtime priority of OFB.
“Agricultural producers are one of the major land owners and are more sensitive to property tax increases,” Spradling said.