Bill could remove sales tax on custom meat processing

A bill that would remove sales tax on custom meat processing in certain cases is headed to the House floor after the Revenue and Taxation Committee voted unanimously to approve it Feb. 17.

House Bill 496, authored by Rep. Linda Wright Hartgen, R-Twin Falls, would exempt meat processing from sales tax when the customer provides their own animal and does not intend to resell the meat. Under the new law, ranchers bringing in their own cattle or hunters having wild game processed would no longer have to pay sales tax on processing fees.

Fees for cutting, processing and packaging a carcass are currently subject to the standard 6% sales tax, while slaughter and transport fees are considered services and don’t have to be taxed.

Hartgen told the committee animal producers and hunters often think processing fees should be considered a service instead of a product.

“The thought here is really that you already own the animal you’re bringing in, so why should you have to pay to get the meat back once it’s processed?” Hartgen told the committee.

Sen. Bert Brackett, R-Rogerson, co-sponsored the bill and got opinions from cattlemen and sportsmen, who were largely in support of the measure, Hartgen said.

Hartgen said the idea for the bill came from Darrin Van Horn, owner of High Desert Meat Processing in Twin Falls, who told her about similar concerns held by many butchers, producers and hunters in his area.

Kortney Bahem and Daniel Lousignont, owners of L&L Meats in Homedale, say the exemption would eliminate a lot of headache for them. As a small business, it can be tough to make sure there is enough left in the account at the end of the month to send off to the tax commission. But the main benefit they see is saving their customers money.

Bahem said they don’t have to pay sales tax on certain purchases for their business, like packaging materials, which is supposed to justify the sales tax on the final product. But those amounts don’t actually line up, leaving Bahem and Lousignont feeling like their customers get the short end of the stick.

“We can go to Costco and buy $100 worth of paper and poly film to wrap meat in, pay $6 in tax and wrap whole carcasses with that,” Lousignont said. “But customers are sometimes paying $50 or $60 in taxes just on their one carcass.”

Bahem and Lousignont said they would rather pay the six cents per dollar on their own expenses than pass costs on to their clients, who Bahem said often put every resource they have into raising animals for slaughter and want the best possible return for their money.

“I see it like taking your car to a mechanic,” Bahem said. “If the mechanic changes your oil or your wiper blades on the car you already own, they only charge you for the cost of the new filter or the new blades, not the four hours of labor they spend changing it.”

Riley Haun is an intern with the University of Idaho McClure Center for Public Policy Research and the UI JAMM News Service.