REAP initiative provides Pennsylvania farmers with tax credits to meet environmental obligations
Due to the leadership of House Republican Caucus Secretary Jerry Stern (R-Blair), a program providing much-needed tax credits for farmers to meet state and federal clean water mandates was approved as part of the 2007-08 state Fiscal Code today.
"This is great news for farmers and anyone who cares about the improvement of the water quality in Pennsylvania," said Stern. "The REAP program will make Pennsylvania a role model for other states in how to help the agricultural industry meet its environmental obligations."
The Resource Enhancement and Protection Tax Credit Program (REAP) is designed to help farmers afford best management practices to manage nutrients appropriately and reduce nutrient and sediment loss in the land. Examples of such practices include improvements to barnyards, pastures and riparian corridors, development and implementation of nutrient management plans, and remediation of legacy sediments.
"This invaluable program was stalled earlier this year within the committee process," said Stern. "I was able to overcome that hurdle by placing the program within the state Fiscal Code through an amendment. Supporting the environment should be a priority within the General Assembly. I went this route because I believe it was vital to the future of our water supplies and streams, and it supports the goals of the Chesapeake Bay Foundation."
Stern's amendment creates the first such tax credit program in the nation, a program that wisely invests tax credits where they will reap the most rewards--cleaning up the environment and assisting farmers in how they do business.
"My only regret is that the cap on funding for the program is not higher, given that the governor is supporting as much as $75 million in tax credits for the film industry. I am hopeful the success of REAP will be so great that the $10 million cap will be raised in future years," said Stern. "This program will be such a boon to every Pennsylvanian. If we can improve our water quality, then we can reduce the cost to taxpayers for municipal water and sewage treatment facilities, not to mention that a cleaner environment simply creates a healthier atmosphere in which to live."
Stern said REAP would provide state tax credits worth up to $150,000 per farm to help producers pay for eligible Best Management Practices (BMP) intended to mitigate the potential environmental impact of their farming operations. The total amount of credits to be made available in the coming fiscal year would be $10 million.
Applicants may receive a tax credit worth 25 percent to 75 percent of the project cost, depending on the BMP selected. With respect to these tax credits, it is important to note that:
- Credits are available for personal and corporate income tax, the Capital Stock and Franchise Tax and Sales and Use Tax.
- Tax credits may be transferred (sold) to other entities.
- A business or individual may sponsor a project installed by another landowner and receive a tax credit.
- Tax credits may be carried over for a maximum of 15 years by the original applicant.
- Tax credits are limited to a maximum of $150,000 per agricultural operation.
Stern said all eligible projects must meet the design and construction standards established by the United States Department of Agriculture’s Natural Resources Conservation Service or the State Conservation Commission, or be certified by a registered professional engineer.
The REAP initiative was supported by more than 65 environmental, agricultural organizations and businesses.
Senate Bill 97, the Fiscal Code, was approved July 16 and signed by the governor.
Rep. Jerry Stern
Pennsylvania House of Representatives
Contact: Tricia Lehman
House Republican Public Relations