Farmers take hit on fuel exemption, education tax

Tax exemptions remain for seed, pesticides and new equipment, but taxes on agricultural land will climb

Saskatchewan farm leaders say they expected the hits they took in last week’s provincial budget, knowing that the pain of the drastic drop in resource revenue would have to be spread around.

The province is expecting a deficit of at least $1.3 billion in the last fiscal year. The 2017-18 budgets hiked taxes and cut spending.

“I don’t think there’s any argument that we’re definitely paying our share,” said Todd Lewis, president of the Agricultural Producers Association of Saskatchewan.

Farmers lost their 15-cent-per-litre tax exemption on bulk gasoline purchases and saw the exemption on diesel for on-field use drop to 80 percent. They will now pay three cents per litre in road tax for diesel.

Those two measures together will contribute $40.2 million to the provincial general revenue fund.

Finance Minister Kevin Doherty said the government decided to maintain tax exemptions on inputs such as seed, pesticides and new equipment because no other province taxes them. He said it represents a substantial amount of money and it was considered.

“I can’t imagine what would happen to our economy in rural Sask-atchewan if we were — the home of agriculture in Canada — if we were the first government in Canada to tax those inputs,” he said.

Education tax is going up as the province moves to a 60-40 government-property tax split. Individual situations will vary depending on property reassessments but overall the tax on agricultural land will climb from $39 million last year to $46.1 million this year.

As well, the expansion of the provincial sales tax, along with a one percentage point hike in the tax, to insurance premiums will also affect farmers.

“It’s not unusual for an average sized farm to have, between personal insurance and crop insurance and hail insurance, I mean, those bills can get up to $100,000,” Lewis said.

“That’s a $6,000 hit. That’s definitely something that will be felt.”

Agriculture Minister Lyle Stewart said nobody wants to pay more taxes, but farmers he spoke to on budget day appeared to be expecting worse.

“They seemed to be accepting it and willing to pay their share.”

Stewart said farmers don’t use a lot of gasoline in farming operations anymore, so the loss of that exemption won’t affect operations.

“The 20 percent reduction in the rebate for diesel fuel is really (the) equivalent of the portion that’s deemed to be used for on-road transportation,” Stewart said.

“It seems to be fair that we would as farmers pay some tax on that portion of the fuel that we use on roads.”

Agriculture critic Cathy Sproule said she would be asking the government how it made the decisions.

“What is the transformational change analysis that they’re applying? How did they come up with that figure,” she said.

Saskatchewan Cattlemen’s Association chair Ryan Beierbach said producers will be watching to see just how all the changes add up.

“We all run our own businesses and we understand that if you’re spending more than you make, you’ve got to deal with that issue,” he said. “We’re doing our share to help take care of the provincial deficit.”

The ministry budget is estimated at $388.6 million.

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