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Potato development and other curious excise taxes – Wacky Tax Wednesday

  • Excise
  • January 10, 2018 | Gail Cole

You can tell a lot about a state from its taxes. It’s not always clear exactly what you can tell, but there’s something there. I’m sure of it. Consider the following: Tennessee’s bail bond tax, Nebraska’s tax on potato growers, and Louisiana’s telecommunications tax for the deaf (which seems wonderfully oxymoronic).

Bail bond tax

Tennessee has imposed a state tax on bail bonds since July 24, 2001. On each bail bond, a bail bondsman must collect the $12 tax from the person who posts the bond on behalf of the accused. The law makes clear that the tax must be paid “before the bond is written” [emphasis theirs]. In the event the tax was not collected on a bail bond, the bond isn’t valid.

The tax isn’t due on changes to the amount of an existing bail bond, and if bond is set for a person charged with multiple offenses, it need only be paid once. However, an additional $12 tax is due when a bail bond is sought pending the appeal of a conviction, “even if the bond is a continuation of a previous bond.”

Why a bail bond tax? When I first learned of it, I wondered if Tennessee has an inordinate amount of people posting bond. Yet, it turns out the tax is for a good cause. The bulk of the revenue generated by the bail bond tax is deposited into the civil legal representation of indigents fund; 4 percent is dedicated to the development and provision of continuing education for professional bail bonding agents.

Potato Development Act

One in four jobs in Nebraska is related to agriculture, but Nebraska is not one of the top 10 potato-producing states. Thus the Nebraska Potato Development Act, created to “protect and foster the health, prosperity, and general welfare of its people by conserving, developing, and promoting the state’s potato industry.” I love that.

To raise revenue for such endeavors, the state imposes an excise tax on potato growers. It generates approximately $75,000 annually. In recent years, however, the tax revenue hasn’t been used.

Perhaps thinking potato growers wouldn’t mind not paying an extra tax, in early 2017, Governor Pete Ricketts backed a bill seeking to terminate the Nebraska Potato Development Act and eliminate the 1-cent-per-100-pound excise tax paid by potato growers. Potato growers were outraged, and the bill was ultimately killed.

Yet it did bring the Potato Development tax to the attention of the Senate Agricultural Committee. Committee chair Senator Lydia Brasch noted at the time, “We expect the Potato Development Committee to take full advantage of the revenue from the excise tax … to develop worthwhile programs to benefit their industry.”

Now legislation has been introduced that would help determine whether the potato tax is being used as it should. LB805 seeks to amend the Nebraska Potato Development Act to include the provision of annual reporting requirements, such as beginning and ending balances of the fund, and “a description of programs relating to research, promotion, and market development for potatoes grown in Nebraska.”

Telecommunications tax for the deaf

I was surprised to learn that Louisiana imposes a telecommunications tax for the deaf on every local exchange telephone company operating in the state. It raises revenue for the Telecommunications for the Deaf Fund, which is tasked with establishing, administering, and promoting a “statewide program to provide accessibility services and assistive technology for persons who are deaf, deaf/blind, hard of hearing, speech impaired, or others who are similarly handicapped.”

As of Oct. 1, 2017, the tax was decreased from five cents to four and one-half cents per month per line. In addition, a four-and-one-half-cents tax per month per line tax was imposed on each wireless handset device on each residential and business customer of a wireless telecommunications service. However, the tax doesn’t apply to wireless devices used only for data purposes, or to prepaid wireless devices.

Because it isn’t possible for a business to collect a half of a cent, the Louisiana Department of Revenue authorizes local and wireless telecommunication service companies to collect and remit the tax at a rate of four cents per month for the first two quarters of the year, and five cents per month for the last two quarters of the year (See Implementation of Act 273).


Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole began researching and writing about sales tax for Avalara in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.