State's beekeepers abuzz about possible tax break

By Matt Benoit, Murrow New ServiceJanuary 31, 2014 

OLYMPIA -- Beekeepers are buzzing about a proposed bill that would exempt bee products and services from the state's business and occupation tax.

Senate Bill 6402 redefines the definition of "agricultural product" to include honeybee products and bee pollination services. It's sponsored by Sen. Jim Honeyford, R-Sunnyside, and co-sponsored by Sen. Sharon Brown, R-Kennewick.

Farmers selling agricultural products wholesale or growing agricultural products owned by others are exempt from a B&O tax under a general exemption.

But Mark Emerich, president of the Washington State Beekeepers Association, said that's not the case for beekeepers.

Despite being regulated by the Department of Agriculture, bee products and pollination services are recognized by the state's Department of Revenue as service providers, and are thus taxable, Emerich said.

"I don't know of any other state where beekeepers aren't in agriculture," said Emerich, who testified at the bill's public hearing Thursday in Olympia.

Emerich, a craft beekeeper, said beekeepers must also pay an excise tax on bee feed, something state ranchers don't pay when buying hay for their livestock.

The disparity between in-state and out-of-state pollination contractors is also an issue, according to Tim Hiatt, owner of Hiatt Honey, a commercial beekeeping business with more 10,000 hives based in Ephrata.

More than half of the state's pollination is performed by out-of-state bee businesses, and only a handful of them register to pay a B&O tax, Hiatt said.

"Tens of thousands of hives that enter the state for pollination don't pay B&O tax," he said, "because the state has no idea that they're there."

In-state beekeepers are taxed on products including honey, wax, propolis, pollen and beekeeping equipment, Hiatt said. Pollination services include those for tree-fruit, seed-crop and berry growers.

But it's the unfair regulation of the tax that bothers him, he said.

"We wouldn't mind so much if they were able to collect it fairly from everybody," he said.

Current B&O rates are 0.471 percent for retailers and 0.484 percent for manufacturers and wholesalers. The tax is levied on gross receipts for all business activities, except for utilities, conducted in Washington.

The bill awaits further action by the Committee on Ways & Means.

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