Merging taxes leaves farm groups confused

Friday, March 27, 2009

© AgMedia Inc.

by BETTER FARMING STAFF

Ontario’s finance minister Dwight Duncan says merging Ontario’s sales tax with the federal goods and services tax will boost business and the province’s economy. Farm organizations aren’t so sure it will be good for them and their members.

“What effect is (the merger) going to have on our FBR (farm business registration) cards in terms of PST exemption at source?” asks Henry Stevens, president of the Christian Farmers Federation of Ontario. Farmers use the cards to obtain exemptions from provincial sales tax on farm-related purchases. “If you’ve got a clearly identified provincial sales tax, that’s one thing but now that it’s harmonized, how’s that going to work?”

Grant Robertson, the National Farmer’s Union Ontario coordinator, says his organization is concerned farmers will have to pay the new 13 per cent harmonized tax up front like they do with the GST and apply for refunds. The approach “will take money out of the farmer’s pocket,” he says, and generate more paperwork.

The NFU also worries farm families will be among those worst hit by the new tax on other purchases. The Liberals promise compensation, a one-time payment for families of $1,000, and $300 to individuals, to be spread over three cheques beginning in June 2010. Exempt from the tax are children’s clothing and footwear, children’s car seats and car booster seats, books, diapers and feminine hygiene products.

Don McCabe, vice president of the Ontario Federation of Agriculture, notes “we need to ensure that farmers remain exempt on the issues that we have been exempt” and the break is extended to other farm inputs.

The merger, announced in Thursday’s provincial budget, (http://www.fin.gov.on.ca/english/budget/ontariobudgets/2009/) is scheduled to take effect in June 2010.

Agriculture highlights in the budget:

• $8 million annually starting in 2009-10 to promote Ontario Food products to the broader public sector
• $1.5 million for the Ministry of Agriculture, Food and Rural Affairs to plan the development of new agri-food research centres focused on livestock and crop production, renewable energy, nutrition and health
• Clarifying Ontario food definitions to increase their visibility in the marketplace

Some allocations with indirect impacts:

• $20 million to the Eastern Ontario Development Fund to enhance investment in the region and help companies there upgrade technology, equipment and employees
• raising the minimum wage to $9.50
• enhanced refundable tax credit rates for small businesses that hire apprentices and co-op students
• introducing tax breaks for qualifying computer and software purchases
• $250 million over five years for an emerging technologies fund to invest in green technology companies
• $50 million over five years to help fund bio-based, environmental and alternative energy business ventures
• reducing the corporate income tax rate on manufacturing, processing, mining, logging, farming and fishing to 10 per cent from 12 per cent on July 1, 2010. BF