The federal Conservative government has announced plans to introduce legislation in the autumn session of Parliament that will make good on a 2007 budget promise to raise the lifetime capital gains exemption on farm sales to $750,000.
The farm tax exemption is part of a draft tax bill of more than 300 pages that would implement budget promises not included in the Budget Implementation Act approved by Parliament June 22.
The draft legislation will be available for public comment until Oct. 23 when the department will begin crafting a bill to present to Parliament.
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The increase in the value of the one-time $500,000 capital gains exemption after a farm sale has been a farm lobby demand for years.
The official Canadian Federation of Agriculture position is that the tax exemption should be raised to $1 million to reflect modern farm values.
Still, the budget promise of a 50 percent increase in the exemption won farm sector praise.
Meanwhile, the government announced last week that the 2006-07 fiscal year surplus was close to $14 billion.
By law, the entire surplus was applied to the national debt.
Critics including farm leaders and agricultural economists argued that some of the surplus could have been better spent on projects or avoided through tax cuts rather than shaving a few percentage points off the national debt that now stands at $467.3 billion.
Prime minister Stephen Harper announced that the $14 billion debt pay down will save $750 million in debt servicing charges each year and all the savings will translate into tax cuts.
CFA president Bob Friesen said allocating a small portion of that surplus to agricultural files would have made a huge difference.
“There are all kinds of places agriculture could have used some of that money very efficiently,” he said in an Oct. 3 interview from Geneva where he was attending World Trade Organization meetings.
He cited a CFA proposal to promote Canadian farm products for local consumers, money for the biofuel industry and enriching national farm safety net programs as areas that could have used the additional money.
“Ottawa should be supporting companion programs that would, for example, allow Saskatchewan with the most farmland to improve its crop insurance program that is one of the worst in Canada,” he said.
“Different provinces have different needs. Some of those federal dollars could have accommodated that.”
At the University of Saskatchewan, agricultural economist Murray Fulton said in an Oct. 3 interview that investment in agricultural research would have been a good use of some of those surplus dollars.
“There is a huge payoff in terms of benefit from research investment and yet it is under-funded,” he said.
Research funding has not recovered from the deep cuts imposed more than a decade ago by then-Liberal finance minister Paul Martin as he tried to balance the budget, said Fulton.
“There has never been a full recovery and dollars into that sector would produce so much result.”
