Keystone Agricultural Producers members have taken their stance on education tax reform one step further and are calling for the funds to be raised through income tax and a tax on residences.
That adds to their long-standing call for removing the heavy tax burden on farmland and production buildings, and came during their annual advisory council meeting Nov. 3.
At the meeting KAP members passed a resolution asking the provincial government to make that change.
Until now KAP’s policy had been silent on the funding.
As a short-term measure KAP members also passed a resolution asking the Manitoba government to assess each farming operation separately, regardless of the relationships of the owners, when applying the school tax rebate and to remove the cap on the rebate, which refunds 80 per cent of the education tax on farmland up to $5,000.
Last year the cap cost farmers $7.5 million in lost rebates, KAP president Dan Mazier told the meeting. With the huge tax increase on many farm properties this year the cap could cost farmers $10 million, he said.
“We’ve heard over and over again from producers across the province about the dramatic rise in municipal and school taxes,” Dan Mazier said in his address to the advisory council. “I heard of one where a producer’s tax bill had increased by $20,000. This is not affordable and it’s not sustainable for our industry.”
The resolution to remove the rebate cap, and another asking the province to restore farmland taxes to 2014-15 levels, which was tabled and then withdrawn, didn’t go far enough for Dugald farmer Edgar Scheurer.
“We need to change the entire system and not just ask for some band-aid solutions for this one year,” he told the meeting.
“We need to ask for some real changes in the system. I don’t think any of those resolutions (so far) address the problem.”
However, he said later he supported funding education through personal and corporate income taxes and taxing residences.
Scheurer is among a group of farmers in the Municipality of Springfield that says it won’t pay the land taxes until the taxation system is fairer.
Scheurer said he is getting calls from other farmers around the province thinking about doing the same next year.
“More the better,” he said.
Scheurer has seen taxes on some of his land jump 95 per cent.
KAP doesn’t have a position on farmers holding back their taxes in protest, but “it really shows the degree of frustration being shown by everybody,” Mazier said.
Harold Penner, who owns land in the Municipality of Emerson-Franklin, saw taxes on one of his quarter sections, go up a whopping 111 per cent to $4,091.52 from $1,934.99.
“I can’t recall such a big increase,” Mazier said.
“If this was on house or commercial property there would just be mayhem.
“It doesn’t reflect the ability to pay. We had floods in 2011 — three million acres lost, 2014 a million acres lost. We’ve got to rethink this.”
KAP is researching higher farmland taxes this year, Mazier said. It found the average increase in the RM of Stanley is 43 per cent with farmers paying $7 to $29 more an acre.
Holland farmer Les Ferris said he’s being paying more than $20 an acre in taxes in the Municipality of Victoria since 2006.
Province-wide the assessed value of farmland is up on average 47 per cent, but on average tax bills on farmland are up just 15 per cent, Benjamin Lyle, a municipal services officer with the Manitoba government told the KAP meeting.
“So you can see there is not a direct link between assessment changes and taxes,” Lyle said. “Rather it depends on what happens with the average value of properties in the municipality you are in as well as the school division you are in.”
Lyle said in a lot of municipalities farmland assessments have risen faster than for other property.
“Now as part of your municipality, farmland is picking up a greater percentage than businesses and residences (of total taxes)…” said Starbuck farmer Chuck Fossay.
“It is a fact that farmland is picking up a greater percentage because everybody went out and bid up the price of land. Assessment is based on market value (of property).”
A way to correct the taxation imbalance is to reduce the portion value on farmland currently set at 26 per cent, Fossay added.
Taxes on property are based on its assessed value. The assessed value is based on what the Manitoba government’s assessment branch determines to be its market value multiplied by 26 per cent. So the assessed value of property with a market value of $1 million, is $260,000, Lyle said.
Then the municipal mill rate is applied to come up with the tax bill. Mill rates vary between municipalities.
If the assessed value of property is going to result in a municipality and/or school board collecting more taxes than are needed, the municipality cuts the mill rate. However, this year in several municipalities, including Springfield, budgets are almost flat yet farmers’ tax bills are up 40 per cent or more, while homeowners and some businesses have lower bills because of the increased value of farmland.
A municipality can ask the province for permission to reduce or increase the portion applied to property values, Lyle said.
Municipalities can also apply special levies to collect more revenue in urban areas to reflect the higher cost of services.
The current system for funding education is out of date, said Minto farmer Bill Campbell.
“This model was based on a half section farm and everybody living within four miles and they went to their local school,” he said. “It was probably a lot more fair and proportionate at that particular time.”
Farmland values have skyrocketed partly because Farm Credit Canada allows buyers to only pay the interest on the loan, he said.
The taxes on one of Campbell’s quarters jumped $600 to $1,600 in two years. He said this year he’ll lose money on it due to too much rain, but the taxes still have to be paid.
However, Campbell argued there should still be some local education funding or the government will close all the schools. And then, like in the 1930s, children will have to board with relatives away from home to get an education.