Policy Change Comes to Washington
There’s hope for beneficial tax changes to come, thanks to talk about a coming tax reform package, says Bruce Knight, founder of Strategic Conservation Solutions. “At the top of agriculture's agenda will be meaningful clarity on estate taxes; expect that to be in any sort of tax package. Less clear is what happens with the tax advantages that support renewable fuels development. Given the interest in agriculture around those, I would expect that to continue to be a top issue for dialogue.”
Consultant John Gilliland adds there’s a possibility of lower personal tax rates for farmers, but points out the tax cuts come with a price that is still being scrutinized by U.S. agribusiness experts. “One of the most significant elements of the reform package is a new border-adjustment measure, which would tax goods based on the country where they are sold rather than where they are produced,” he says.
Under this destination-based approach, imports into the U.S. would be taxed, while U.S. exports to foreign markets would be exempt. Industry analysts expect the border adjustment could provide a short-term boost to U.S. exports, but it would also mean higher taxes, at least in the short-term, for companies that must import necessary inputs from abroad. Many opponents worry it would translate into higher prices for U.S. consumers.
“The border-adjustment measure is a crucial part of the congressional tax reform package, because it’s expected to raise approximately $1 trillion in tax revenue for the U.S. government,” Gilliland adds. “The bill’s sponsors on Capitol Hill need this tax revenue to offset the cost of other reforms in the package.”
Trade is an area where the president is apparently not in step with Congress, but that may soon change, says Knight.
“Having watched many administrations, what I see is that every administration, as it comes in, becomes more positive toward trade and more understanding of its importance for the economy,” Knight says. “NAFTA [North American Free Trade Agreement] was unequivocally positive for agriculture in the U.S. and for agriculture in Mexico and Canada as well. But it makes sense to look at NAFTA and see if what has been unresolved in the last two decades can be resolved.”
"As we review all of the executive actions and laws moving through Congress, the priorities for Syngenta will remain grounded in the importance of a science-based, risk-based, transparent review process at all agencies here and abroad."
He’s encouraged that he’s already seeing a new emphasis on trade agreement enforcement. “Most of the anti-trade agreement rhetoric really is frustration at the lack of enforcement of agreements,” Knight says. “When China or Russia impose nontariff trade barriers on beef or something like that, it fosters criticism of the trade agreement, but it’s really frustration with implementation. The new administration could press reset on the enforcement of trade agreements and make sure these disputes get resolved.”
But for the Trans-Pacific Partnership [TPP], Transatlantic Trade and Investment Partnership [T-TIP], and Bilateral Investment Treaty [BIT], the outlook is grim, says Laura Peterson, head of federal government relations at Syngenta. “TPP and the BIT are pretty much gone, and Brexit further challenges T-TIP,” she says. “Renegotiating NAFTA seems to be on the table for this administration. “
How we review our tax issues will have ramifications in trade negotiations. “At the end of the day, Americans are always the best producers, early adopters of technologies and do more with less,” Peterson says. “We need export markets. We’re looking to the administration to provide leadership to push for them.”
During the campaign, many promises were made about reducing regulation, so expectations here are high. “There will hopefully be a more favorable atmosphere with the EPA [Environmental Protection Agency], and there’s a significant change from the previous administrator to the individual who is now in charge, Scott Pruitt,” says Richard Gupton, senior vice president of public policy and counsel for the Agricultural Retailers Association. “The environment at EPA has seemed like a constant assault on the ag industry, from the WOTUS [Waters of the United States] rules to trying to take products out of the marketplace. Pruitt has fought the federal government on those issues. Hopefully, there will be a reset on how that agency looks at scientific data when it is making decisions.”
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The president has signed an executive order on reducing regulation and controlling regulatory costs, Peterson says. This includes repealing at least two existing regulations when promulgating a new regulation.
“As we review all of the executive actions and laws moving through Congress, the priorities for Syngenta will remain grounded in the importance of a science-based, risk-based, transparent review process at all agencies here and abroad,” says Peterson. “I think agriculture appreciates the importance of smart regulation, as we bring innovative products to market that are reviewed for health, safety and environmental effects. Our company has made commitments on sustainability and The Good Growth Plan, and that’s going to remain important.”
As always, the best advice for approaching the coming changes is to watch what is happening and to stay involved. “Are you weighing in? Are you making sure the appointees understand your concerns and the stories from your farms and ranches?” Peterson says. “It’s not too soon.”
Note: This article reflects the status of policies at the time of this writing in March 2017. Opinions expressed herein are those of the speaker and do not necessarily reflect the view of Syngenta.
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