In the bureaucratic world of federal finance, government benefits to farmers are not simply calculated by what Ottawa spends on farm programs.
It also involves money that Ottawa does not tax away, but could. By that measure, add another $455 million in federal benefits to farm support planned for this year.
According to a finance department report on “tax expenditures” issued last week, Canadian farmers benefit from several significant government decisions not to tax.
It estimates that:
- The policy to grant a lifetime $500,000 capital gains tax exemption for farm property will cost the federal government $325 million in uncollected taxes in 2000.
- The deferral of tax on government contributions to Net Income Stabilization Accounts will cost Ottawa $87 million this year.
- The deferral of tax on the government bonus and interest income in NISA accounts will be worth $43 million to farmers.
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On the other hand, the government estimates it will collect $67 million this year on taxable withdrawals from NISA accounts.
Meanwhile, the government’s decision to exempt some food from the goods and services tax is a far bigger consumer tax expenditure, reducing Ottawa’s projected GST revenues by $3.47 billion this year.
Overall, government-designed tax loopholes reduce the national tax bill by tens of billions of dollars a year.
From the $6.9 billion child tax benefit to the $14 billion worth of federal tax points transferred to the provinces to $1.635 billion in foregone taxes on lottery and gambling revenues, Ottawa has created a tax system riddled with ways to avoid it.
But an official of the Canadian Federation of Agriculture said last week too much should not be made of the farm-related tax savings.
The $130 million in deferred taxes on NISA accounts already are included in government estimates of the value of the program, said executive secretary Sally Rutherford.
And the lifetime capital gains exemption applies to all small business, she noted.
Besides, the only farmers who benefit are those who are selling their farms.
“This is not really a benefit to farmers who are trying to make a living in the industry.”
