Manitoba’s farmers can chalk up a small victory in their battle to have the way education taxes are levied on farmland revised.
At the recent Keystone Agricultural Producers annual general meeting, held in early February in Winnipeg, the provincial government delivered the clearest signal to date that this message is getting through to policy-makers.
Provincial Agriculture Minister Ralph Eichler went so far as to characterize the way they’re being currently raised as “flawed.”
Few who are familiar with the system would disagree. The policy we currently have in Manitoba is a holdover from the days of the half section and section farm.
It reflects a time — up until the end of the Second World War and even into the 1950s — when the majority of the population were rural dwellers and many of them farmers. It also reflects a time when farmland was a lower-value asset.
According to figures from Manitoba Agriculture, in 1965, the average value of Manitoba farmland was just $56 an acre and the Canadian average was $68. Adjusted for inflation that would be $437 in Manitoba in 2018, and $530.50 an acre across Canada.
I think it’s safe to say any farmer in the province would jump at farmland at those prices these days.
The same dataset from the province pegged the actual cost of farmland in 2016 (the last available year) at $1,894 in Manitoba and $2,871 Canada-wide.
At the same time, the value of productive assets has skyrocketed, and margins have progressively narrowed. Certainly, there have been the occasional spikes in profitability, but these never last long. As the old saying goes, nothing fixes high prices like high prices, and generally all that’s left in the long run is the higher cost structure that responding to this market demand spawns.
That has in turn led to a decades-long trend of farm consolidation and growth, as operations have grown larger.
Thus, farmland education tax bills per operation have climbed and so has the level of farmer frustration.
In Allan Dawson’s article reporting from the KAP meeting in the February 14 issue of the Manitoba Co-operator, Starbuck-area farmer Chuck Fossay, who also chairs KAP’s taxation committee, says he pays $22 an acre in education taxes today. Winkler-area farmer Jack Froese estimated his education taxes are running him $24 an acre.
Fossay noted that even a modest farm of 2,000 acres can face an education tax bill of $20,000, offset by a maximum of $5,000 through the province’s education tax credit program.
By comparison, the level of education tax paid by the average homeowner has been much more stable, as the value of the underlying asset hasn’t increased in the same way. Yes, Manitoba housing prices have risen, especially in the past 15 years or so. But that’s on the heels of decades of slow to no growth.
In Winnipeg, for example, the average price of housing of all types is $293,932, according to a study by the real estate firm Royal Lepage, released last summer. In the Winnipeg school division that translates into an education tax bill of $1,413.79, reduced to $713.79 with the application of a $700 education tax credit.
While the provincial government has now recognized the disparity needs fixing, officials have been reluctant to put a timeline to addressing it.
The province is currently undertaking a major review of education in Manitoba, with an eye to creating better education outcomes at lower costs.
Both are laudable goals. The Conference Board of Canada has given Manitoba a spate of Ds in its national education report card, noting poor reading, science and math scores amongst students. That is despite having the second-highest per-student spending in the country at $14,499 per pupil in 2014-15, according to Statistics Canada.
However, how those funds are raised isn’t part of this review, despite the fact that Ian Wishart, then minister of education and training, said it would be in May of 2017. The provincial government has since dug in its heels, with both Premier Brian Pallister and Eichler saying the education review has to happen first.
It’s fair to say the two issues should be reviewed independently. How the funds are raised and how they are spent are separate and complex issues.
But both are equally pressing. The province could and should be examining them concurrently.
The province has acknowledged the education tax system is flawed, and now it needs to fix it, and should fix it as soon as possible.
In the interim, it should remove the $5,000 cap on education tax relief.