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The Rural Voice, 1993-04, Page 74BRUCE County Federation of Agriculture NEWSLETTER 446 10th St., Hanover, Ontario N4N 1 P9 519-364-3050 The Rural Voice is provided to Bruce County Farmers by the BCFA. OFA and the Fair Tax Commission In March of 1991 the Ontario government began a comprehensive review of taxation in Ontario. The Fair Tax Commission was established to undertake this review of federal, provincial and municipal taxation in the province and to report to the Minister of Revenue in late 1993. The commission is being aided in its task by working groups that research spe- cific areas of taxation and by com- munity tax forces that are designed to raise awareness of the review and soli- cit input from the public. The mandate of the FTC is to provide advice to the government on the design and imple- mentation of a fair tax system. There are four specific taxes under review that could have a significant impact on Ontario farm families. These arc land speculation tax, wealth tax, taxation to achieve environmental goals and property tax. LAND SPECULATION TAX: The working group on the tax treatment of real estate gains was unable to reach a consensus. The majority report called for no changes in the tax treatment of real estate gains. The OFA made two recommendations to the working group. 1. Do not implement a land speculation tax because of negative impacts to the farming industry. 2. In the event the government proceeds with a land speculation tax, exempt farmland, as the government has said it will exempt principal residences, as both food and housing are necessities. Farm land was exempt under the 1974 Land Speculation Tax Act in Ontario. WEALTH TAX: Wealth taxes can take two forms. An annual net wealth tax is a percentage levy on a taxpayer's net worth, or the difference between assets and liabilities. A wealth transfer tax is a one time tax on the transfer of wealth through gifts or at death. Again the wealth tax working group was unable to reach a consensus for recommendations to the Treasurer. The BCFA will be making the 70 THE RURAL VOICE following points: agriculture, in many cases, requires large capital assets that generate a low return, therefore there are problems with ability to pay an annual wealth tax. A wealth tax on transfer by gift or at death could have severe negative consequences for intergenerational transfer of farms. An inheritance tax or succession duty could require liquidating farming assets to pay taxes. Existing taxes such as capital gains, taxes on income and probate fees already deal with taxation of wealth. TAXATION AND THE ENVIRON- MENT: The environment and taxation working group developed the principle that "the primary goal of environ- mental tax instruments should be to encourage environmentally sustainable practices and discourage environ- mentally damaging ones." The theme of this principle is to use high taxes to modify behaviour, and this could have very serious implica- tions for farmers. Taxes on farm inputs such as pesticides, fuel, drainage components etc. could harm Ontario farmers' productivity and competitive- ness. The BCFA maintains that farm- ers recognize the importance of a healthy natural environment to farm- ing. In our submission to the FTC we will be endorsing the focus on educa- tion that the farm community has deve- loped to grapple constructively with environmental challenges. This focus includes programs such as "Our Farm Environmental Agenda", "Best Man- agement Practices", "Grower Pesticide Certification" and "Food Systems 2002". These programs all concentrate on improving environmental quality on individual farms through cost effective measures. In the long run this approach will be more successful than a punitive taxation system. PROPERTY TAX: The working group's report, while not particularly negative to farming, deals with farm property taxes as a farm policy issue and not a fundamental tax issue. OFA made the following recom- mendations to the property tax working group. 1. Continue the Farm Property Tax Rebate until tax reform eliminates the need for this interim administrative mechanism. 2. Remove the funding of education from the property tax base for all property. 3. Implement county -wide Section 58 Combined -Factor Assessment across the province. 4. Tax farm property according to the "benefit principle", i.e. land taxes pay for services to land while personal taxes pay for services to people. The Fair Tax Commission will be holding public hearings in the Grey Bruce region on May 25, 1993. This is a busy time for farmers. The BCFA will be presenting a brief including these and other considerations on the input of tax reform on Bruce County farmers. If our members have any concerns on these issues please contact our office in Hanover at 364-3050.0 submitted by Byron C. Monk President Bruce County Federation of Agriculture ANNUAL MEET THE MEMBERS DINNER AND TOMMY COOPER AWARD Friday, April 2, 1993 ELMWOOD COMMUNITY CENTRE Social time 6:30 p.m. Dinner 7.00 p.m. Tickets: $12.50/person — Contact a director or call the office for tickets. Bruce County Federation of Agriculture Directors' Meeting Monday, April 26, 1993 8:00 p.m. OMAF Boardroom, Walkerton Members are welcome to attend