Manitoba’s education tax burden is quickly shifting to farmers.
To blame is the declining portion of education paid directly by the province and the rising value of farmland.
It’s causing the Keystone Agricultural Producers’ (KAP) to push the issue to the front of the debate during the provincial election campaign. With a vote slated for September 10, the group hopes to push politicians into committing to taking action.
Why it matters: KAP says education taxation is not only inequitable, it’s unsustainable as farm profits shrink in the wake of declining prices and rising production costs.
“Manitoba is the last jurisdiction in the country that collects education funding from assessment values of property and farm buildings,” KAP president Bill Campbell said in an interview July 4. “We’ve seen an evolution of less people on the land that has been compounded by the increased asset values of farmland.”
Campbell says, “We’ve seen the municipal contribution to education has increased by over 50 per cent (between 2011-12 and 2018-19). That has been targeted somewhat to farmers… ”
It’s due to two major factors.
First, the province’s contribution to funding K to 12 schooling as a percentage is declining over time, while the municipal share rises.
The other is the rapid increase in the assessed value of farmland, which has more than doubled in many parts of Manitoba since 2015. Property values, along with mill rates, are used to calculate the amount of municipal and education tax property owners pay.
KAP isn’t sure what the solution is. It might be funding education through income taxes, or removing education taxes from farmland and buildings and taxing farm homes, Campbell said.
Provincial government data shows the municipal contribution to education jumped 52 per cent or $292 million to $851.9 million between 2011-12 and 2018-19.
During that same period the province’s contribution to education funding rose by 10 per cent or $136 million to $1.4 billion.
As a result over that five-year period the Manitoba government’s contribution to funding education dropped to 59 per cent from 66 per cent and the municipal share rose to 35 per cent from 28.
As the education tax burden is shifting from the province to municipalities, in agro-Manitoba, most taxes come from farmland and farm buildings.
“Total education tax dollars from farmland increased by 53.7 per cent from the 2011-12 school year to the 2016-17 school year, while the total education tax dollars from all other property classes combined rose by 28.38 per cent,” KAP, citing Manitoba government data, stated in an email.
“I know for a fact that some residences have started to pay less education tax on property because of the assessed value of farmland, especially in the Red River Valley, because the land is so valuable,” Brad Curtis, superintendent of the Red River School Division headquartered in Morris, said in an interview Oct. 17, 2018.
“Farmland (values) the last 10 years have just jumped through the roof. The residential properties haven’t. You could see some houses paying less now than they did five years ago and see farmers paying two or three times as much.”
Property values in Manitoba are assessed every two years. Many Manitoba farmers were shocked when they opened their tax bills in the fall of 2016. Farmer Edgar Scheurer in the RM of Springfield saw his taxes (municipal and education) jump 95 per cent.
A farmer in the Municipality of Emerson-Franklin saw taxes on one quarter section up a whopping 111 per cent to $4,091.52 from $1,934.99.
Farm Credit Canada data showed, on average, the value of Manitoba farmland doubled over the previous four years.
Manitoba farmland values are still going up. In the spring the Manitoba government mailed property owners the latest assessed values used in calculating 2020 municipal and education tax bills.
The assessment for a quarter section owned by this reporter and a family member in the RM of Lorne is up 12 per cent. Over a five-year period the assessed value of that quarter is up 136 per cent and since 2013 up 182 per cent.
KAP notes that since farmland is appreciating faster than other types of property the tax burden is increasing for farmers and declining for everyone else.
For example, a farmer who earns $60,000 a year from 2,000 acres of land could face an education tax bill of $15,000 (2,000 acres X $10 tax per acre — $5,000 through the Farm Education Tax Rebate program), Chuck Fossay, chair of KAP’s taxation committee said Feb. 6 in an interview.
In comparison a home owner in town earning the same might only pay $400 in education taxes on a house assessed at $250,000 after the property tax rebate, he said.
Even if that tax burden wasn’t shifting to farmers, KAP would still be seeking a change because owning farmland doesn’t reflect a farmer’s ability to pay, Campbell said.
“That’s the inequitable part of it,” he said. “I’m not sure citizens of this province understand that. Just because you have an asset that’s worth so much doesn’t necessarily mean it generates revenue or profit. The only time that asset value actually has relevance is the day that you sell it. If you sell an asset you’re no longer utilizing it.”
Making changes won’t be easy, Campbell said. The issue is complex and the current system, in place for years, has a bureaucracy built around it. But if KAP doesn’t push for a change nothing will change, he said.
“It’s society’s responsibility to bear the cost of education equitably.”