Some Manitoba farmers are getting an unpleasant surprise when they open their 2016 farmland property tax bills.
“I swallowed hard and wondered what was going on,” said Lowe Farm farmer Bill Toews in an interview.
“I was shocked at the amount of increase, and not just in the education tax, but in municipal tax as well.”
Toews, who recently retired in the Rural Municipality of Roland, said the tax bill on one of his quarter sections is up 61 per cent from 2014. (His 2015 bill wasn’t immediately available but Toews said it was similar to 2014.)
Education and municipal taxes on that property are up 77 and 39 per cent, respectively. Meanwhile, the RM of Roland’s budget is up just 5.6 per cent.
Keystone Agricultural Producers (KAP) president Dan Mazier says there are anecdotal reports of some farmers’ tax bills jumping 90 per cent.
Increases will vary by municipality, depending on each one’s budget and tax base. For example, the tax bill for this reporter’s farmland in the RM of Lorne is up 21 per cent.
There’s more to this than the long-simmering farmer complaint about funding schools through taxes on farmland and buildings. Farm Credit Canada says, on average, Manitoba farmland values doubled since 2012. Property taxes are based on a property’s assessed value. Manitoba has 10 classes of property, including farmland, residences, businesses, pipelines and railways.
Land values double
That sudden and dramatic increase in land values means farmers will be paying a greater — and some say inequitable — share of the total municipal budget unless the government adjusts the “portion percentage” assigned to farmland.
“To me that is a pretty easy fix,” Rob Brunel, a farmer and mayor of the Municipality of Ste. Rose said in an interview. “There is still going to be some inequities, but it is going to be as easy a fix as there is. Some people’s taxes are still going to go up and some will go down, but the majority of the burden will not be placed on the farmland owners in our case.
“Now with the reassessment (of farmland values) there is a shift of who is paying what because farmland values increased over 40 per cent (from the previous assessment) and in general houses did not increase for the most part,” Brunel said.
“Not every homeowner is seeing a decrease in taxes, but I would say a majority of homeowners saw a decrease in taxes and lots of businesses, which is rare, saw a decrease in taxes as well. The burden was put over to the agricultural land.”
Brunel has heard from a lot of irate farmers in his municipality, created in 2014 when the Town of Ste. Rose du Lac and the RM of Ste. Rose amalgamated. As a farmer, Brunel knows their pain. Property taxes on the land he farms, which includes rented land, went up $18,000 this year.
The amalgamation of an urban and rural municipality highlights the shift in the tax burden, Brunel said. Formerly, each municipality’s rate payers — homeowners and businesses in town and farmers in the rural area — covered their own infrastructure, with rural residents also contributing to services in town such as recreation.
Now that two municipalities have merged, farmers are seeing about a 40 per cent jump in their total property tax bill this year even though the municipality’s budget is up less than one per cent, he said.
“In my opinion as a farmer and as a municipal leader there is no reason why farmland should be subsidizing urban areas or urban areas subsidizing farmland,” Brunel said. “There has got to be a balance.”
But the shift in tax collection isn’t restricted to newly merged municipalities, said Shawn McCutcheon who farms in the Homewood area in the RM of Dufferin. As its former reeve and former chair of Midland School Division, he understands the Byzantine world of property taxation better than most.
“There is a fairness issue I think with (some) people not paying their fair share (of the municipal budget, including public good services such as libraries and recreation),” McCutcheon said.
“It is a big problem I think. It is going to create hard feelings.”
McCutcheon agrees the simplest solution is developing new portioning numbers to restore the historical balance among property taxpayers.
It’s a sound alternative, in the short term, to lobbying the Manitoba government to remove education taxes from farmland and buildings, he added.
“There is no way the provincial government will have the financial means in the near future to address that farmland tax rebate (of 80 per cent capped at $5,000),” McCutcheon said. “But we can say to the government, ‘you can be a big part of the solution without it actually costing you any money.’ We are just going to realign the burden to fairly reflect historic trends.”
Keystone Agricultural Producers (KAP) president Dan Mazier, who farms at Justice, said the current system isn’t fair. Land prices have doubled but “it doesn’t reflect the ability to pay,” he said in an interview.
“Can you imagine if factory taxes went up 50 per cent? It’s unbelievable.”
KAP is studying the farmland taxation issue, he said. In August, KAP gave Education Minister and past KAP president, Ian Wishart, a “heads up,” Mazier said.
“Maybe now with a new government in place we can have a reset,” he said.
Indigenous and Municipal Relations Minister Eileen Clarke was on the road last week and unavailable for an interview.
“Manitoba’s new government recognizes that taxes in this province are high and a competitive tax environment matters when it comes to attracting new investment and protecting farmers’ bottom line,” a spokesperson said in an email.