Provincial Finance Minister Donna Harpauer on Wednesday released her 2022-23 budget with $17.6 billion in expenditures on $17.2 billion in revenues, for an expected deficit of $463 million, well down from the province’s forecast deficit of $2.185 billion for 2021-22.

The province said its budgetary appropriations and expenses for the agriculture ministry come in at $462.4 million, up 19.5 per cent from 2021-22, on “strong 2022-23 crop insurance program and record agriculture research funding.”

The 2022-23 budget’s broader agriculture-themed expenditures come in at $1.04 billion, up 18.3 per cent from the 2021-22 budget of $879.3 million, primarily due to “higher projected crop insurance indemnities as a result of higher crop prices, as well as higher reinsurance premiums.”

However, that estimate is well down from the province’s latest forecast for those 2021-22 ag-themed expenditures, at $3.19 billion, due mainly to last year’s drought-related crop insurance payouts and AgriRecovery program costs.

New line items relating to agriculture this year include $475,000 to set up a new Crown corporation, to be called the Saskatchewan Indigenous Investment Finance Corp.

The new Crown is expected to offer up to $75 million in loan guarantees on private-sector lending to Indigenous communities and organizations for investments into “natural resource and value-added agriculture projects,” the province said.

The province will also further backstop major value-added ag projects through “enhancement” of the Saskatchewan Value-added Agriculture Incentive (SVAI), a 15 per cent tax credit in place since 2018 on capital expenditures of at least $10 million toward newly constructed or expanded value-added ag facilities.

Retroactive to 2018, eligible projects will still get the 15 per cent rebate on the portion of a project’s expenditures up to $400 million, but could also get 30 per cent on the portion between $400 million and $600 million, and 40 per cent on the portion in excess of $600 million. The dollar value of the tax credit will be capped at $250 million.

Examples of qualifying projects include canola crush facilities, pea protein processors, oat milling operations, malt producing operations, and cannabis oil facilities, the province said.

The SVAI and other incentives are “key to Saskatchewan’s competitiveness, attracting private investment from global companies like BHP, Richardson International, Viterra, Ceres Global Ag, Cargill, Federated Co-operatives, AGT Foods, Paper Excellence and Red Leaf Pulp,” the province said Wednesday.

The province on Wednesday also noted that starting April 1 this year, certain “clarifications” will made to provincial sales tax (PST) related to farming and agriculture activities — for example, confirming a PST exemption for the “on-farm digging of dugouts.”

Revenues

On the taxation side of the ledger, the province announced Wednesday it will make “minor changes” to its education property tax (EPT) mill rates for this budget year, “asking residential (and) agricultural as well as commercial and resource property owners to pay slightly more EPT on average.”

For agricultural properties, that 2022 EPT mill rate will rise to 1.42 from 1.36, while residential property EPT mill rates will rise to 4.54 from 4.46.

Harpauer said Wednesday the province’s improved revenue forecast is based on increased revenue from taxes at $8.1 billion, up $850 million from 2021-22 — but also on non-renewable resource revenue at $2.9 billion, up by $1.6 billion from 2021-22.

That increased resource revenue, she said, is “largely due to higher potash and oil price forecasts, which is the result of stronger than expected global demand.”

While crude oil values have been on an upslope for months, they recently leaped higher following Russia’s invasion of Ukraine, as economic sanctions imposed by other countries limit Russia’s involvement in energy markets.

Potash prices have also climbed due to fresh sanctions limiting exports from both Russia and Belarus, the world’s No. 2 and 3 potash-producing countries behind Canada.

“It’s too soon to tell if oil prices will remain high for an extended period and what impact that could have on revenues,” Harpauer said, adding that “because resource prices are so volatile, our government has set a goal of reducing our reliance on resource revenues.” — Glacier FarmMedia Network

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The province on Monday announced that for the second year running, it will waive the minimum farm income thresholds normally required for B.C. properties to be classified as farms for property tax purposes.

Agriculture Minister Lana Popham, in a release, said that while purchases of B.C. foods have grown “instinctively” among consumers and communities over the past year, the COVID-19 pandemic still “has been very difficult for everyone, including the thousands of British Columbians who are involved in putting food on our tables.”

Had a similar waiver not been put in place last year, “more than 400” properties reporting sub-threshold farm income, as well as several “developing” farms, risked losing their farm classification for 2021, the province said.

(“Developing” farms are properties in the process of setting up as farms but not yet generating sufficient farm income. Such an operation must submit a farm development plan for approval before it can qualify for the farm classification.)

With the waiver again in place, “farmers will not have to worry about the possibility of losing their farm classification and having an increase in property taxes in 2022.”

For the 2022 tax assessment roll, the deadline to apply for farm classification — or for the “retired farmer’s dwelling land” classification — is Oct. 31 this year.

B.C. had almost 19,000 farm properties for the 2021 tax year. In a typical year, that classification requires a property to generate a “minimum amount of gross income from a qualifying agriculture use, based on the size of the parcel of land.”

For example, a farm operation area of between 1.98 and 10 acres must generate at least $2,500 in gross farm income per year. If larger than 10 acres, it must generate at least $2,500 plus five per cent of the actual value of the area in excess of 10 acres.

BC Assessment annually sends out self-reporting income questionnaires, backed up with “intermittent” inspections, to determine whether a property continues to qualify.

The province “will continue to be responsive in our targeted COVID-19 supports for people and businesses, so we can build the foundation of a strong recovery,” Finance Minister Selina Robinson said in Monday’s release. — Glacier FarmMedia Network

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Finance Minister Scott Fielding’s budget, released Wednesday, calls for about $248 million in education tax rebates in 2021 alone for about 658,000 property owners.

Owners of Manitoba residential and farm properties in 2021 can expect a rebate of 25 per cent on education tax paid in 2021, while owners of other types of properties will get a 10 per cent rebate. In 2022, the rebate for residential and farm properties will be raised to 50 per cent.

The rebate is to be based on the school division special levy and community revitalization levy before the Education Property Tax Credit Advance, the province said.

Property owners eligible for the rebate will continue to pay education property taxes but will get their rebate cheques in the same month that municipal property taxes are due, or earlier, the province said. The province will send out the new rebate automatically, thus property owners will not need to apply to receive it.

The rebate will also mean a proportionate 25 per cent cut in Manitoba’s existing school tax offsets in 2021 — and that includes the current farmland school tax rebate, as well as the education property tax credit and advance, seniors’ school tax rebate and seniors’ education property tax credit.

Thus, the existing farmland school tax rebate — which in 2020 rebated eligible landowners up to 80 per cent of the school tax owing on their farmland, to a maximum of $5,000 — will instead rebate up to 60 per cent of school tax owing in 2021, to a maximum of $3,750.

In its budget documents, the province gave an example of a farm property with $5,600 owing from a school division special levy. In 2020, the province’s farmland school tax rebate would apply on $4,480 of that amount and the landowner would owe a net special levy of $1,120.

In 2021, the same landowner would get a rebate cheque for 25 per cent of the total levy, or $1,400, and he/she/they will still have to apply to receive the farmland school tax rebate, which would be proportionately cut by 25 per cent, to $3,360.

The landowner would thus owe a net special levy of $840 for 2021, down 25 per cent from its 2020 level.

The planned phase-out will also include a 2020 education property tax freeze, the province said Wednesday.

Residential properties eligible for the rebate will include single dwelling units, condos and multiple-unit dwellings, the province said. Property owners who get the new rebate on the community revitalization levy and also get a provincial tax increment financing grant will have their grant reduced by the amount of rebate.

Properties that are exempt from education property taxes, or that pay grants in lieu or payments in lieu of taxes, will not be eligible for the new rebate.

Owners of “other” properties, such as commercial, industrial, rail, pipeline or designated recreational land, will only get rebates at the 10 per cent level as they also can expect help from “significant” business tax measures in the 2021 budget, as well as pandemic-related business support programs, the province said. Also, the province noted, education property tax remains a tax-deductible expense for businesses.

The rebate announcement brings an early start to a 2019 campaign pledge from Premier Brian Pallister’s Progressive Conservatives. At the time, the party promised to phase out education taxes on property over 10 years, or sooner, starting in 2022.

In last October’s throne speech, the government said it would instead begin the phase-out process in 2021, but didn’t give details at the time.

Manitoba, the government said Wednesday, is “currently the only province that utilizes locally-determined municipal school property taxes to fund its education systems.”

Phasing out education property taxes, the province said, will “modernize Manitoba’s tax structure and put Manitobans on an equal footing with other provinces that fund education from general revenues.”

Funds, bonds, scholarships

Overall, the province’s 2021-22 budget projects $17.838 billion in revenue against $18.255 billion in spending, for a net budget deficit of $1.597 billion in the fiscal year.

New spending of interest to farmers in the budget also includes:

• increasing the Conservation and Climate Fund by $400,000, to $1 million, to fund projects that reduce greenhouse gas emissions;
• a new $1 million Organics Green Impact Bond to divert organic waste from landfills;
• raising Watershed Districts Program funding to nearly $6 million; and
• $1 million for a new 4-H Manitoba Scholarship Program, working with the Brandon Area Community Foundation and Manitoba 4-H Council to set up an endowment fund that’s expected to support $42,000 in scholarships per year, starting in 2021.

— Glacier FarmMedia Network

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The provincial government, in Tuesday’s budget, set the provincewide EPT mill rate on agricultural land for 2021 at 1.36, down slightly from the previous rate of 1.43.

EPT mill rates for 2021 will otherwise increase on residential (4.46, up from 4.12), commercial/industrial (6.75, up from 6.27) and resource (9.79, up from 9.68) land. The province’s EPT mill rates in all categories had been unchanged since 2017.

The changes comes as Saskatchewan property owners see a revaluation on their land in 2021, using Jan. 1, 2019 as the base date for assessment values. All properties in Saskatchewan are revalued once every four years.

Since the 2017 revaluation, the taxable assessment of ag properties has increased, while the taxable assessments of the other property classes have declined, the province said Tuesday.

“As our government continues to provide increasing support and funding to our education system, the province will be slightly adjusting its EPT mill rates to align with year-over-year inflation,” Government Relations Minister Don McMorris said in a release.

EPTs, he said, “will continue to be significantly lower than when our government took office in 2007.”

The Saskatchewan government redesigned its EPT system in 2008-09, a move it said “significantly” lowered educational property taxes starting that year.

The province noted the 2021 revaluation also follows its recent decision to cut the percentage-of-value taxable assessment rate for commercial/industrial and resource properties to 85 per cent, down from 100 previously.

For farmland, those percentages of value are 45 per cent for rangeland and pasture, and 55 per cent for cultivated land. For residential property, it’s 80 per cent.

‘Record coverage’

Meanwhile, Finance Minister Donna Harpauer’s 2021-22 budget on Tuesday projected the province’s agriculture-related spending at $879.3 million for the year, up $80.5 million from the year-earlier budget’s figure.

That increase, the province said, will be “primarily due to $73 million in higher crop insurance expense resulting from a higher insured liability and increased AgriStability payments, as well as increases for AgriInvest and Agricultural Water Development projects.”

The province’s ag budget “will once again fully fund business risk management programs, provide a record level of per-acre coverage under the crop insurance program, continue last year’s record investment in agriculture research, and make important investments in irrigation expansion,” Agriculture Minister David Marit said Tuesday in a separate release.

The expected increase in AgriStability payments follows last month’s agreement between the federal and provincial governments to withdraw that program’s reference margin limit.

The province also noted its 2021-22 crop insurance program is set to include more options for insuring tame hay acres; increased Native Forage Establishment Benefit coverage; a Commercial Vegetable Pilot Program; increases to the establishment benefit values for canola, lentils, chickpeas and corn; and updates to the base grade for large-seeded Kabuli chickpeas.

Agriculture-themed spending is expected to form 5.1 per cent of total provincial expenses — which are expected to come in at $17.09 billion, against $14.48 billion in tax and resource revenue, federal transfers and other revenue, for a 2021-22 provincial deficit of $2.61 billion. — Glacier FarmMedia Network

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It’s a promise welcomed by farmers who say the burden of funding schools in rural areas has shifted disproportionally to them because the assessed value of farmland has risen faster than other property (see further down).

While some people are skeptical given it might not be a priority for future governments, what surprises others is that Pallister says he’ll eliminate the tax without replacing it to make up the $800 million in lost tax revenue.

“Our commitment is real,” Pallister told reporters by phone following his government’s throne speech in the Manitoba legislature Nov. 19. “We’ve demonstrated our competency in terms of delivering on tax reduction already,” he added, alluding to fulfilling a promise July 1 to cut Manitoba’s provincial sales tax by one per cent.

Why it matters: Manitoba farmers have long complained education tax on farmland is inequitable because it doesn’t reflect landowners’ ability to pay. But they say it’s more unfair than ever because land prices are rising faster than on other property.

As the education property tax, which includes homes, is phased out, the shortfall will be made up “by our growing economy,” some of which will be the result of increased value-added processing of agricultural products, Pallister told reporters.

“We’re going to find additional tax revenues without having to go back to Manitoba farmers and business people and saying, ‘hey, we need you to pay more on this category over here so we can pretend we’re saving you money over here,’” he said. “The thing that farm families know… is that net is what matters, not gross. So we want to leave the net incomes of Manitoba families higher, not lower, and that means lowering the tax burden effectively without increasing it somewhere else and offsetting the gains that you’re hoping to give people.”

Finding a more equitable way to fund education has been at the top of Keystone Agricultural Producers’ (KAP) agenda since its founding in 1984.

While Manitoba’s general farm organization was often circumspect about how to do it, sometimes members mused about using income tax, or a tax on homes, including farmers’.

KAP welcomed the Progressive Conservative Party’s promise to phase out the education property tax during the election, and did so again after the throne speech.

“On the issue of education property tax, we will note that the disparity between what farmers are paying and what the average homeowner is paying continues to grow,” KAP stated in a news release Nov. 19. “According to the government, once fully implemented, the average homeowner will save more than $2,000 annually, while many farmers pay 10 times that amount. We are ready to join the province in working together collaboratively on the implementation details as this is something we have been focused on for decades.”

However, KAP doesn’t want the tax cut to result in substandard education for rural students.

“KAP also believes that the next provincial government needs to take steps to ensure that rural and urban students continue to have equitable access to educational opportunities, and that this move doesn’t represent a long-term cut to the education system,” KAP president Bill Campbell said in an interview Sept. 4.

KAP says overall it’s pleased with the government’s throne speech.

“We look forward to working together on the issues that matter most to Manitoba farmers,” KAP’s release says.

The throne speech says the government will focus on “five key guarantees”: lower taxes, new jobs, better health care sooner, new schools, and a made-in-Manitoba climate and green plan.

Commitments related to agriculture and rural Manitoba include cutting red tape so farmers can serve local markets, implementing the Sustainable Watersheds Act and doubling the $52 million being invested in the Growing Outcomes in Watersheds (GROW) Trust, and hiring eight more conservation officers to help enforce the ban on night hunting and other wildlife regulations.

“Your government will eliminate provincial regulatory barriers that restrict the ability of our farmers to produce food for local markets, and free consumers to connect directly with local producers,” the throne speech says.

To reduce greenhouse gas emissions the government will raise the ethanol and biodiesel standards to 10 and five per cent, from the current 8.5 to 10 per cent, and two per cent, respectively.

“By displacing fossil fuels these measures will reduce emissions by 375,000 tonnes over three years, or the equivalent of planting 25 million trees,” the speech says. “These fuels will be based on Manitoba-grown corn and canola — a win win for our agriculture industry and the environment.”

The throne speech also promises action on crime and public safety, including in rural areas.

Attorney General Cliff Cullen will announce the details soon, Pallister said.

Farmland and education property taxes explained

The Keystone Agricultural Producers (KAP) says farmland owners are paying an increasing share of education taxes relative to other property owners.

Based on provincial government figures Manitoba farmland and building owners contributed $64 million of the $850 million in education property taxes collected in 2018-19. That’s 7.5 per cent of the total and accounts for the $42 million farmland owners received in education tax rebates of 80 per cent to a maximum of $5,000.

Averaged over about 10 million cultivated acres there’s about $6.40 an acre in farmland education taxes. But some farmers with higher-value land pay almost $30 an acre. On a 2,000-acre farm, that’s $60,000 a year in education taxes alone.

The shift in the education tax burden to farmers is 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 (local) share raised by taxing property, 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.)

Many Manitoba farmers were shocked when they opened their tax bills in the fall of 2016. 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. This spring the Manitoba government mailed property owners the latest assessed values to be 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 was up 12 per cent. Over five years its value went up 136 per cent and since 2013 is up 182 per cent.

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“We know there are a number of funding models that would look better,” Eichler said during a question period following his speech at the Keystone Agricultural Producers’ (KAP) 35th annual meeting in Winnipeg Feb. 5. “We know the model is flawed — basically farmland is carrying the largest part of that (in rural areas).”

Speaking to reporters later, Eichler agreed farmers are paying an unfair proportion of education tax. Asked if he’s taking that message to cabinet colleagues he replied: “Of course. Our base is rural Manitoba. Let’s be clear about it.”

He went on to say that the fundamental challenge will be to ensure that the funding model is fair and accurate.

Why it matters: Manitoba farmers have claimed for years local education taxes on farmland are unfair. KAP says the rapid increase in farmland values has shifted the tax burden to farmers and away from other property owners and is unsustainable.

The government announced Jan. 23 a nine-member committee will conduct a “comprehensive, independent review of the kindergarten to Grade 12 education system,” and report back by February 2020. But funding isn’t part of it, even though then Education and Training Minister Ian Wishart said in May 2017 it would be.

Eichler said the committee will likely make its recommendations before year-end, but he later told reporters farmers shouldn’t expect changes to education taxes until after the next provincial election Oct. 6, 2020.

KAP, which has been lobbying for changes in education taxation for decades, is disappointed.

Starbuck farmer Chuck Fossay asked Eichler to take KAP’s message to cabinet “and encourage that they do this funding review sooner rather than later because it’s really becoming a challenge for many producers.”

Eichler repeated Premier Pallister’s message that improving Manitoba’s education system is the first step.

“We have no idea what’s going to come out of the report — whether we’ll still have trustees, whether we’ll have more trustees, will there be school divisions amalgamated… we know there has to be a better model,” Eichler said.

Manitoba currently has the second-highest per capita public school funding in Canada, according to Statistics Canada, but ranks last in national student testing in reading, science and math, which has prompted the review.

Big bills

The last three years most Manitoba farmers have seen big jumps in local education taxes — some in the double digits.

“We’re seeing as farmland prices appreciate much more quickly than residential or business properties that the farmers are picking up a larger and larger share of the rural education costs through property taxes,” Fossay, who chairs KAP’s taxation committee, said in an interview Feb. 6. “We were hoping that this review committee that’s looking at education would include funding.

“But we want to continue to remind government that farmers are taking on a larger and larger proportion of the cost. We really feel that it’s not fair to tax people on their assets rather than their income because an asset’s value has no relationship to ability to pay.”

About eight years ago Fossay paid around $10 an acre in property taxes — half to the municipality and half to the local school division.

“I did a local study and when you looked at what farmers were paying in the municipality versus residential and businesses it was a pretty even split,” he said. “Now, eight to 10 years later I am paying about $22 an acre property tax. Roughly about $10 is going to the municipality and $12 is going to the school division. So my taxes have more than doubled on that property for schools in the last eight to 10 years.”

Some farmers in the Winkler area are paying even more.

“We’re paying upwards of $40 an acre in municipal taxes, which includes your education portion of taxes and those taxes are running upwards of $25 an acre,” Winkler farmer Jack Froese said in an interview Feb. 6. “These taxes are not sustainable.”

And it’s getting worse, he added. Land that sold for $7,000 or $8,000 an acre in the last assessment is now $10,000, he said.

Difficult questions

Having served as a school trustee seven years, Froese knows how complex education funding is.

“We need the government to fund a larger portion of that and in my estimation that will have to come out of general revenue so it’s not local assessment,” he said.

“It’s an unfair proportion that we are bearing and if you’re a smaller farmer it just isn’t sustainable.”

For example, a farmer who earns $60,000 a year from 2,000 acres could face an education tax bill of $15,000 (2,000 acres X $10 tax per acre – $5,000 through the provincial Education Tax Rebate program).

In comparison a homeowner in town earning the same might only pay $400 in education taxes on a house assessed at $250,000 after the property tax rebate, Fossay said.

“We don’t mind paying our fair share, but as the percentage of farmers making up the population shrinks we really feel there has to be an adjustment so we’re all paying our fair share… ” he said.

Eichler didn’t rule out removing education taxes from farmland and taxing farm homes the way non-farm homeowners are currently taxed for education. Changing how farmland is assessed, or the way the education tax is calculated, or funding education through income tax are other options.

“It’s very complicated the whole formula,” he said. “Income tax is part of the solution we might be able to look at.”

Layered funding

School divisions are funded by the provincial government, as well as by local taxpayers, adding to the complexity. The portion paid by each varies among divisions. Generally the provincial funding portion has declined over the years, resulting in local taxpayers having to pay more.

School divisions, which are governed by elected trustees, have taxing authority. If the province opts to fund education directly, it may also eliminate school boards and/or restrict or eliminate their power to tax.

While farmers would welcome tax relief, if local taxpayers no longer fund local schools they also may have less say in how they operate. That has implications for sparsely populated rural communities, KAP president Campbell said in an interview Jan. 24.

“They are the life blood of some communities.”

In the meantime, KAP will keep pressing the government for education tax relief.

“We will not let it be forgotten and we will bring it up in our conversation that it is part of the education review,” Campbell said in an interview Feb. 6. “We want to be sure it stays on the forefront.”

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Bill Toews of Kane certainly was. The retired farmer says the total tax bill (municipal and education) on one of his quarter sections in the Rural Municipality of Roland jumped $1,004, up 30 per cent from last year to $4,351. That’s $27 an acre in taxes.

In 2016 the same quarter saw a 61 per cent increase in taxes relative to 2014. Toews wasn’t alone then and isn’t this year either.

“It’s not fair anymore,” Keystone Agricultural Producers (KAP) president Bill Campbell said in an interview Oct. 18 while combining barley on his farm near Minto.

“The bare land does not send kids to school. It’s the people… so why do we base my tax bill on land and yet somebody in town just pays on their house?”

Why it matters: Farmers are paying more than other taxpayers as farmland values rise and other properties, like houses, stagnate. This approach doesn’t fairly reflect the ability of farmers to pay, some say.

In 2016 farmland taxes jumped dramatically across most of the province. One Red River Valley farmer saw his taxes double. The unprecedented increases prompted some farmers in the rural municipality to delay paying their taxes in protest.

Shifting burden

Property taxes are driven by property values. As values increase so do the taxes. Famers are willing to pay their fair share, Toews said, but the burden, especially for school divisions in farming areas, has dramatically shifted to farmers because of rising land prices, and away from other property owners, creating inequity.

“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.

“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.”

The assessed value of Toews’ quarter is up 37 per cent from last year. Coincidently, the education tax bill from the Red River School Division on that land is also up 37 per cent or $800.

Property taxes are based on two main components — the assessed value of property and the mill rate set by municipalities and school boards.

Farmland taxes vary with the value of land and the needs of the local municipality and school division. Total taxes on a quarter section of land in the Rural Municipality of Lorne owned by this reporter and a family member are up almost 13 per cent from 2017. While the education tax portion is up just seven per cent, municipal taxes went up 22 per cent.

The assessed value of the land was up 18 per cent.

Doing the math

How farmland taxes are determined.

The Manitoba government’s assessment branch determines the assessed value of farmland every two years based on its market value multiplied by a portioning factor assigned to that property class. Manitoba has 10 property classes, including farmland, residences, businesses, pipelines and railways.

The portioning factors for farmland and residences, are 26 and 45, respectively. So the assessed value of a quarter section of farmland with a market value of $1 million, is $260,000 ($1,000,000 X 25% = $260,000).

The amount of taxes on that property will be $260,000 multiplied by the mill rate.

Municipalities and school boards set their operating budgets and then adjust their mill rates to collect from taxpayers the money needed to cover those budgets.

It’s relative

Traditionally when property values jumped municipalities and school boards reduced their mill rates accordingly, but that doesn’t help farmers when the assessed value of farmland has skyrocketed relative to other property.

The Manitoba government ordered all school divisions to cap their tax increases to local taxpayers at two per cent, which the Red River School Division did. Still on that one quarter Toews’ education tax bill jumped 37 per cent, underscoring how the tax burden shifted to farmers.

While some argue that’s fair given higher land prices boosts farmers’ net worth, Campbell counters “it doesn’t reflect your ability to pay.”

Higher land values make farmers wealthier on paper, but to capitalize the land must be sold and then you’re no longer farming, he added.

KAP has suggested to restore fairness municipalities should reduce the portioning factor assigned to farmland. If municipalities won’t do it individually the province should order them to, KAP has said.

KAP delegates passed a resolution last November calling on the Manitoba government to fund education through personal and corporate income taxes and by taxing residences.

KAP members also passed a resolution asking the Manitoba government to remove the cap on its farmland education tax rebate program, which refunds 80 per cent of the education tax on farmland up to a maximum of $5,000.

In 2015 the cap cost farmers $7.5 million in rebates, then KAP president Dan Mazier told the meeting. He estimated the cap would cost farmers $10 million in 2016.

Farmer input needed

KAP is counting on a Manitoba government review of the public kindergarten to Grade 12 education system, to begin in 2019, to find a fairer tax system for farmers, Campbell said.

Asked for more details, a Manitoba government official emailed the following statement: “The K-12 review will include public consultation on a wide range of topics and Manitobans will be encouraged to voice their concerns and suggestions on how to improve the education system.”

Campbell said it’s important for farmers to take part in the consultations.

“We need to get people engaged because this is not going in the right direction,” he said.

“There seems to be almost an acceptance by urban people that this is all right and this is good. But as long as their taxes remain in line or reducing, they’re hidden from the realities of what is actually happening with the demands of our school divisions.”

As an interim measure KAP wants the Manitoba government to reduce the portioning factor assigned to farmland, Campbell said.

The post Taxing times appeared first on Manitoba Co-operator.

The bad news is KAP hasn’t convinced a single municipality or the Manitoba government to implement changes to reduce the tax burden on farmland.

The good news is there are signs reforms to education taxes on farmland could be coming.

“I think the government is talking the most positive I’ve seen in a long time about trying to make some changes,” KAP president Dan Mazier told the meeting. “Stay tuned.”

Later, in his report to delegates, KAP general manager James Battershill said: “We perceive pretty strong and clear indications from the education minister (Ian Wishart) right now that this government is interested in some major changes to the way education is funded in this province. It is something we have pushed for decades. We’d like to see some resolution too, so if we can present an even stronger argument that not only has the burden for funding education in Manitoba been disproportionately paid for by farmers, but it’s worse (due to increased farmland assessment).”

• Read more: Education taxes to be looked at under review
• Read more: KAP has a plan to tackle skyrocketing farmland taxes

Requests to Wishart’s office for comment were sent to Finance Minister Cameron Friesen. As of press time he had not responded.

KAP has lobbied for years to end education taxes on the assessed value of farmland and farm production buildings, arguing it unfairly places too much tax burden on farmers and doesn’t reflect their ability to pay.

The issue came into sharper focus last fall when new, higher land value assessments translated into double- and even triple-digit percentage increases in farmland tax bills.

Farm Credit Canada says, on average, Manitoba farmland values increased 12 and eight per cent respectively in 2015 and 2016.

While all property taxes, including non-farmland, homes and factories, are based on their assessed value, KAP contends farmland values have increased more than other property, resulting in shifting a higher and unfair proportion to farmers either directly as landowners or through higher land rent.

The latest farmland assessment notices, which the 2018 tax bill will be based on, have taken another jump, Battershill said.

Lower percentage

KAP has asked the Manitoba government to lower the percentage used to calculate the portion of tax revenues collected from farmland, currently set at 26 per cent. (Manitoba has 10 classes of property, including farmland, residences, businesses, pipelines and railways.)

A reduction would reduce the amount of farmland tax paid for both municipal services and local education.

In the interim, KAP sent a letter to municipalities informing them they have options to reduce the tax burden on farmland, including reducing the portion percentage applied to farmland. However, first municipalities would have to apply to the Manitoba government for permission 12 months in advance, and if granted, it wouldn’t apply to education taxes.

Municipalities, without provincial permission, can grant farmland owners a tax rebate, but it wouldn’t include education taxes.

Battershill took that message directly to the RM of De Salaberry earlier this year. The council said it couldn’t afford to rebate taxes.

“I think we knew many RMs would be responding that way and that’s why this was really a step in the process to try and get the provincial government to reduce the portion of assessment across the province to give some degree of universal support to producers,” Battershill said.

Getting the Manitoba government to reduce the tax rate on farmland province-wide is the most equitable approach, he said.

Later in the meeting KAP delegates defeated a resolution for KAP to lobby the Manitoba government to allow municipalities to set different mill rates for different types of property.

The mover, Roblin farmer Walter Hammond, argued it would be another tool for municipalities.

“This isn’t going to solve all of our problems by a long way, but it might go someway to making things fairer and simpler to work out how they raise their taxes,” he said.

But opponents warned if approved the resolution might weaken KAP’s case for the government to reduce the portion of taxes on farmland province-wide.

They also noted a municipal mill rate change would not affect the amount of education tax collected on farmland.

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UPA members had recently pledged to revoke previously-permitted access to their land for snowmobile trails starting Monday (Feb. 6) in a dispute dating back to last March’s provincial budget.

Laurent Lessard, the province’s new agriculture minister as of Jan. 26, announced Friday he had stopped the planned rollout of reforms to the farm property tax credit program (PCTFA) and would revert it to the program model that was in place up until Dec. 31.

In a statement, Lessard said he was choosing the “economic development of the regions” over the PCTFA reform plan.

The province had announced last March that management of the PCTFA would shift to Revenu Quebec (RQ) starting Jan. 1 this year, with an eye toward simplifying the program and easing eligibility requirements to allow an additional 2,500 farmers to receive PCTFA benefits.

The UPA, however, has argued the changes to the PCTFA formula would lead to an average hike of 38 per cent in farmers’ property tax bills.

Lessard said the province was investing more money in the new PCTFA than under the existing program, but the “variations between certain producers were judged to be unacceptable.”

Discussions last week with UPA representatives showed the two sides were in an “irreconcilable situation,” he said Friday.

Despite calling a halt to the PCTFA reform plan, Lessard said he still wants to work on ways to help smaller-scale producers by creating a new tax credit program in the near future.

UPA president Marcel Groleau, in a separate statement, said the province had made a “good decision” in cancelling the PCTFA reform plan and it was no longer necessary for farmers to revoke access to their land for off-road trails.

However, he said, the province has not yet announced any plans to work with farmers, municipalities and the relevant provincial ministries on a sustainable farm property taxation model.

The UPA has estimated farmland values have seen a “substantial” rise of 800 per cent over the past 20 years, and the assessment model used by municipalities has added to the tax pressure on farmers, Groleau said.

Parti Quebecois ag critic Andre Villeneuve, in a separate statement, agreed the province mustn’t sweep the issue of farmland taxation under the carpet.

Villeneuve said he had warned the Liberal government last April that the planned changes to the PCTFA could leave individual farmers paying thousands more out of pocket. “Why wait until there are real negative impacts on the tourism season to act?”

Denise Grenier, presidente of Quebec’s federation of snowmobile clubs (FCMQ), said in a separate statement Friday her organization was “very satisfied” that the dispute was resolved. — AGCanada.com Network

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Mayor of Ste. Rose Municipality and farmer Rob Brunel was among the first to the microphones as Premier Brian Pallister and his provincial cabinet assembled to take questions from delegates at the Association of Manitoba Municipalities convention. He asked if the province would be prepared to go through a process to adjust the portion percentage assigned to farmland.

“What we’ve seen is an increased tax burden placed on farmland when it comes to municipal budget,” he said.

Brunel is referring to the portion, or percentage, of a property’s assessed value to which taxes are applied. The province determines that percentage. Currently, farmland is taxed at 26 per cent of its assessed value.

The large increases farmers saw on their tax bills this year reflect how much farmland has been rising in value. Since 2012 average farmland values have doubled, according to Farm Credit Canada.

The jump in taxes this year has raised widespread concern that farmland owners are paying a disproportionate share of municipal budgets.

Minister of Finance Cameron Friesen, who was among other cabinet ministers taking questions from AMM delegates, thanked Brunel for his question, saying cabinet had anticipated the matter would come up at the AMM’s convention.

“Certainly, this is a concern to us,” Friesen said, adding that the matter has been frequently raised during consultations as it conducts an ongoing review of Manitoba’s tax system.

“We have some bold ideas that we’re setting out to explore on that subject. But also we understand that, in the interim, and in the right now, operationally it creates a huge challenge (on farmers).

“As a government we take the view that we’ve already had enough taxes and this is a detrimental burden on operation. We’re seeking to understand what could be done right now to relieve some of the pressure on that burden to producers.”

In a statement released later in the week, Friesen again cited the government’s ‘value for money’ review and red tape reduction initiative now underway.

“It would be premature to comment on any potential changes of the current system until that review is complete and recommendations are brought forward for consideration,” the statement said.

Indigenous and Municipal Relations Minister Eileen Clarke said government is working closely with all stakeholders, including Keystone Agricultural Producers (KAP), on the matter and cited the property tax study now underway by KAP.

That study is looking municipality by municipality at how much have land values increased and accordingly how much have the taxes bills increased. The increases are not uniform across the province.

Brunel said later in an interview pressure must be kept up on the province to address the issue.

“There is a need and urgency to not only fix school tax on farmland but this steady shift of taxes on to farmland,” he said.

“Budget season is just around the corner. Quite frankly, as a municipality we would like to rectify this as soon as possible. But we also don’t want to just put this fire out. We want to settle this long term as well.”

Dan Mazier, KAP president, agrees it won’t be easy to restructure how municipal taxes are collected, noting his organization’s repeated ask to remove the $5,000 cap on education tax rebates for farmland. This issue of assessment only further complicates the discussions, he said. The matter will need to bring multiple government departments together, including finance, education and municipal relations.

“It’s going to take awhile to sort out,” he said. “We’re asking them (the province) to sit down with our stakeholders, which, in this case would be not only KAP but the AMM and Manitoba School Boards Association. Because sitting back and pointing fingers at each other and saying ‘get your taxes down’ is not working. It can’t work this way.”

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