Farm Income Crisis Made Worse by Taxes and Red Tape
Author:
Richard Truscott
1998/11/23
In the old days, farm income was impacted by things like drought, frost, hail and pests. Nowadays the drought comes in the form of slack prices in commodity markets, the killing frost in the form of regulatory red tape, the hail of user fees pelts down relentlessly, and swarms of tax-collecting locusts sweep across the land.
If you make your living on a farm, you know what's going on. Net farm income in Saskatchewan is expected to drop by 70%. That spells real hardship for farmers and the people in our towns and cities that depend on their business.
The decline is largely the result of a significant and unexpected drop in commodity prices coupled with rising input and transportation costs. Trouble in Asian markets and a subsidy war between the U.S. and the European Union (the Subsidy Superpowers) have caused wheat and hog prices to fall 41% and 65% respectively, over the past year.
The farm income crisis is an enormous challenge. Income stabilization programs like NISA seem inadequate to the task. But what is the solution Canadians cannot afford to join the war of the Subsidy Superpowers over the long haul, and an ad hoc bail-out package will do little to deal with the fundamental problems facing the farm community.
Part of the solution may be to reduce the growing tax burden on farmers.
Over the past few years, our federal and provincial governments have failed to weave a system of effective and self-sustaining farm safety net programs that will support and defend Canadian farmers while minimizing the impact on taxpayers. But they have been very effective in weaving a system of taxes to support and defend government bureaucracy.
According to the Saskatchewan Wheat Pool, Canadian farmers paid more than $138 million in user fees for government services this year - a 28% increase from three years ago. Farmers also got stung when the NDP government raised income and other taxes between 1991 to 1995, and hiked lease rates for Crown pasture land by 25% this year.
And how about the new property assessment system introduced in 1996 and 1997 The provincial government claimed that the education tax on property would increase by $15 million in rural areas because of changes in the property tax assessment system. But according to the CTF's research, the shift in education taxes onto rural areas has been about $42 million - almost three times the government's figure! In fact, the amount of the education tax levied on property taxes in rural areas increased by 20% from 1996 to 1997.
Add it all up, and you can see that our government is harvesting a bumper crop of farm taxes!
Rather than just calling on Ottawa for a cash bail-out, the Saskatchewan government should deal with it's own oppressive tax and regulatory burden. Our legislators should look at a range of measures, including removing education taxes from property taxes, reducing sales, fuel, and income taxes, and cutting red tape.
The solution to the farm income crisis may ultimately depend on international factors like an end to the subsidy war and the recovery of world economies. But we can make farm life a lot easier in Saskatchewan if we fix the problems that were made in our own legislature.