Saskatchewan farmers will be watching closely this week to see how the provincial budget affects their pocketbooks.
Saskatchewan Premier Brad Wall sent a clear message to the province last week when he told the Saskatchewan Association of Rural Municipalities that the province needs to reconsider how government revenues are generated.
Wall said the province must reduce its reliance on resource revenues, which are prone to fluctuation, and place more emphasis on consumption taxes.
Wall reiterated that message yesterday, fueling speculation that the provincial sales tax, currently set at five percent, could be increasing.
“This is not going to be a popular budget,” Wall told reporters in Regina.
An increase in the PST is possible, he added.
“It might (go up).… We haven’t ruled anything out.”
Saskatchewan’s farmers are bracing themselves, said Norm Hall, a farmer from Wynyard, Sask., and past-president of the Agricultural Producers Association of Saskatchewan.
Saskatchewan producers currently benefit from PST exemptions on a number of essential farm inputs, including seed, fertilizer, farm chemicals, farm machinery and machinery parts.
They also benefit from a farm fuel tax exemption. The fuel exemption been mentioned as a benefit that could be clawed back as the Wall government attempts to address a provincial deficit that’s been estimated in the range of $1.2 billion.
Hall said there is speculation that the government is looking at increasing the PST rate by one percent and broadening the base of the PST, which could involve removing farm inputs from the list of PST-exempt products and services.
The value of PST exemptions on farm inputs has been estimated at nearly $380 million annually.
According to Hall, that includes about $163 million on purchases of seed, fertilizer and pesticides, another $84 million or so on farm machinery and parts and roughly $120 million on farm fuel tax exemptions.
“We’ve had some really good years, but commodity prices have been tailing recently,” said Hall.
“We’ve had a really good run … but maybe this Cinderella story is coming to an end … so is this the time to be tacking extra expenses (on to the province’s farmers)? They didn’t do it to the oil economy when it was going down. They haven’t done it to the potash industry … and we hope they don’t do it to us now that we’re starting to see things tailing off.”
Hall said the province’s farmers are also concerned with school tax mill rates.
Rural properties across the province have been reassessed and the new values will be used this year to determine how much tax money is raised for education.
Hall said the total school tax burden paid by rural landowners could go up significantly if education mill rates are maintained at their current levels.
“It doesn’t sound like that mill rate is going to change,” Hall said.
“So with the increase in (rural) assessments, there will be more school taxes being paid by farmers.”
Rural land reassessments take place in Saskatchewan every four years.
Since 2012, farmland values have been appreciating steadily in the province, according to Farm Credit Canada, which reports on farmland values every year.
According to FCC, farmland resale values in the province increased on average by more than 19 percent annually in the four-year period ending Dec. 31, 2015.