A ruling by the Mississippi State Tax Commission to increase the property tax catfish farmers pay on their pond acreage has been put on hold, at least for this year. That's good news for the more than 300 catfish producers in the state who were notified by their county tax assessors in April and May of an impending increase in their property tax bills.
The letters to catfish producers asked them to furnish local tax assessor offices with the number of acres they own that are currently being used for catfish production. The letters also informed catfish farmers that their ad valorem tax bills would be rising significantly due to the state's decision to change how fish ponds are assessed.
The proposed state ruling would have added $1,000 per acre to the appraised value of all land in fish ponds. Translated into dollars paid, the increase would have tripled, and in some cases increased by ten-fold, catfish producers' tax bills, according to Ben Pentecost, president of the Catfish Farmers of Mississippi.
Pentecost, who farms approximately 825 acres of catfish with his brother in and around Doddsville, Miss., says fish ponds are normally built on clay soils, which are considered class three or four land for tax purposes. That puts the tax value of agricultural class three land averaging around $400 per acre in the north Delta, $444 per acre in the south Delta, and $125 per acre in east Mississippi, he says.
The recent proposed ruling stems from a decade-old tax commission ruling designed to make land-use taxes “uniform and equitable.” To do that, the state agency previously added a clause to the tax cost saying that catfish ponds would be valued at cost.
However, because the commission didn't provide any specific figure in their previous ruling, most county tax assessors left it alone. There were three counties — Humphreys, Sharkey and Issaquena — that came up with their own valuations for catfish ponds. None, Pentecost says, come close to the $1,000 increase, though.
Paul Smith, who operates Trans Fisheries, Inc., in Moorhead, Miss., and farms about 2,500 acres of catfish, says the additional $1,000 on top of the current appraised value of fish pond acreage, as proposed by the state tax commission, would increase his tax expenses by more than $30,000 per year.
“It would have roughly tripled the taxes on my ponds, raising my tax bill by about $13.50 per acre,” Smith says. “We don't have that kind of extra money. Catfish farmers are not doing well right now and catfish prices are down.
“Catfish farming is not the cure-all for money that many people think it is. With good management, you can still make a living at raising catfish, but it's high risk and there are a lot of hidden costs in catfish production. For example, pond maintenance is about two and one-half times what we initially thought it would be.”
Smith adds, “The catfish industry in Mississippi probably produces as many jobs as Nissan is supposed to be producing for the state, and now the state wants to tax us additionally for that. The whole thing is just wrong. We're getting hit from all sides. We're already paying more for power and now they want to raise our taxes. If they keep on the way they are going, the state is going to kill this whole industry in Mississippi, and it will end up moving to Arkansas and Alabama.”
Pentecost says the Mississippi's State Tax Commission's decision to at least temporarily rescind its plan to increase the appraised value of catfish ponds was likely made because they knew they had come up with a land use value they couldn't necessarily defend.
“A lot of questions were asked and they were beginning to feel a little pressure to come up with a better method to determine the fair value of land in catfish production.”
The plan now, Pentecost says, is for the experts at Mississippi State University to develop a more well-thought-out number. It's customary, he says, for the state tax commission to hire Mississippi State University when there is a need to determine a land-use value for crop and timber land.
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