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May 9, 2013

Two steps backward for education tax fairness
By Doug Chorney

Two pieces of news delivered via the recent provincial budget make it clear to farmers that the Province is watering down its education tax rebate program on farmland – and its promise to completely eliminate, through rebates, the long-disputed education tax on farmland.

The first piece of disappointing news is that the rebate remains once again at 80 per cent – even though farmers were promised in the 2011 election that the rebate would go right up to 100 per cent in order to make the education tax system fair.

The other disappointment is that the rebate has been capped at $5,000, a blatant discrimination against producers with a larger land base.

Just to re-cap the history of this rebate, farmers used to be taxed on all farm property – and of course, this was unreasonable because land and production buildings are needed to carry on the business of farming. With years of pressure from KAP, the Province gradually reduced the tax through an increasing rebate. 

There are many farmers who pay far in excess of $5,000 in education tax, so with the new rebate cap, they will see their education tax bill skyrocket. For example, a farmer who was receiving a $20,000 rebate will now lose $15,000 – or three-quarters of the benefit.

This change, in combination with several other program modifications, will result in $6.2 million of the promised rebate not being paid to farmers.

Is this fair? Farm families should not have to bear this tax burden, based on the way in which they operate their farm business. Many farmers, especially younger ones, see the opportunity in expanding their land bases and have gone into debt to do so. What a way for them to start out, with huge education tax bills looming every year!

The Province has found a way to cling to this antiquated method of collecting education taxes – still on the backs of those who own farmland. I recognize the need for fiscal restraint, but it should not be done by unfairly taxing farmers so that they carry more than their share of the cost of educating our children.

Manitoba is one of the last few jurisdictions still funding education through property taxes. Once and for all, we need a new model – one in which funding comes from general revues and is truly sustainable. Everyone pays their fair share, based on their ability to pay.

In the current model, Manitoba Agriculture, Food and Rural Initiatives is paying for the farmland tax rebate. Think of it – an agriculture department making a very significant contribution to education, and one group of society paying more than their share. It just doesn’t make sense.

The Province, through the education tax rebate on farmland, and more recently through its promised rebate on principal property to seniors, has admitted that the system is broken. It’s clear that it needs to be fixed.

In conclusion, we ask the Manitoba government to reverse the changes to the rebate program for farmland immediately, and make plans for the next budget that will see it live up to its promise of removing education tax completely from farmland.  

Doug Chorney is a farmer from East Selkirk, Manitoba, and president of Keystone Agricultural Producers, Manitoba’s largest general farm policy organization. It represents over 7,000 farm families and 23 commodity groups throughout the province.

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