John F. Kennedy once famously said, “ask not what your country can do for you; ask what you can do for your country.”
It’s unlikely that anyone was volunteering to pay more tax or take less support from governments back in Kennedy’s day, but the sentiment is just as important now as it was in 1961.
Farm groups typically lobby for lower taxes and better (richer) farm safety net programs. Through history, that has usually been easy to justify. Farm profitability has often been poor or even non-existent. To survive, producers needed every advantage governments could provide.
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That’s not the situation now, and it hasn’t been the case in most sectors of the industry for a number of years. The most recent farm income statistics show farms are profitable, particularly grain farms and particularly in Saskatchewan.
Against this backdrop, it’s appropriate for Saskatchewan’s auditor to question the farm fuel tax exemption. Judy Ferguson notes the program doesn’t have a clear purpose.
The exemption costs $121 million a year in foregone revenue. Agricultural Producers Association of Sask-atchewan president Norm Hall is quoted as saying the exemption averages $4,000 per farm. Of course, the larger the farm and the more fuel used, the greater the benefit.
When the farm economy has struggled, as has often been the case, the exemption was another way to improve the economic plight of producers. Any political party that suggested scrapping the exemption would have faced an immediate backlash.
Even now, it’s politically sensitive and it’s useful that the question has been posed by someone who isn’t seeking votes.
There are arguments to support the exemption. Most provinces offer similar support, so if one province cuts the exemption, its producers would be at a disadvantage. And there’s the question of international competitiveness.
Farmers can also argue that most of the diesel and at least some of the gasoline isn’t burned while travelling provincial highways. If the fuel tax is to pay for highways, perhaps there’s an argument for farm exemption. However, taxes are seldom dedicated to a particular purpose. Money is collected and governments spend it as they see fit. With all the possible uses of taxpayer money from health care to education, and with a sizable deficit projected for this fiscal year, is it reasonable for farmers to continue receiving this tax break?
The same question applies to AgriInvest. Should the federal and provincial governments be doling out money to producers based simply on their net eligible sales? Other than the need to make a matching deposit, this is free money with no strings attached.
It can be useful to build a nest egg to guard against returns taking a nosedive. However, it can also be money used as a down payment for land, thereby contributing to escalating land values.
For the record, I use the fuel tax exemption and happily collect my annual AgriInvest contribution. However, I don’t feel entitled to it.
Some will argue that government waste is rampant so farmers might as well get their share. The better approach is to challenge where governments spend our money.
Old Age Security is another sacred cow needing examination. Why do all seniors get monthly payments even if they’re wealthy? And why has 65 remained the magic age?
These questions need to be asked, and agriculture shouldn’t be exempt from scrutiny.
