By Kate Jackman-Atkinson, Editor, myWestman.ca
NEEPAWA, Man. — Like most tax-saving opportunities, the details are specific, a bit convoluted and hard to find. But as the days roll closer to April 1, when the federal carbon tax will be implemented, information is finally starting to trickle out about just what exemptions farmers will have, and how they can go about accessing them.
While the carbon tax proposed by the Manitoba government would have exempted all farm fuel, last fall, the provincial government announced that they would not follow the federal government’s directive to force Manitobans to pay a carbon tax. Manitoba joined the Saskatchewan government’s legal case challenging the constitutionality of the federal government imposing the tax. The five judges hearing the case have yet to make their decision, so starting April 1, the federal carbon tax will hit Manitobans.
While the expectation was that the new tax, officially called the Greenhouse Gas Pollution Pricing Act (GGPPA), wouldn’t be levied on the dyed fuel used by farmers, that’s not entirely the case. Farm fuel will be eligible for the exemption, but only under specific conditions.
The exemption will only apply to gasoline or diesel, not kerosene or propane, and only if the fuel is for use exclusively in the operation of eligible farming machinery and all or substantially all of the fuel is for use in the course of eligible farming activities. For Manitobans, the real challenge is that the CRA will only allow the exemption if the fuel is delivered to the farmer in their yard. This means that farmers who purchase farm fuel at a card lock will not be exempt.
Farm lobby groups in Saskatchewan, Manitoba and Ontario are calling on the federal government to level the field, but as it sits now, in order to obtain the exemption, farmers will not only need to have fuel delivered to their yard, but they’ll also need to have a form on file with their supplier. In the coming weeks, local farmers will be receiving their L402 Fuel Charge Exemption Certificate for Farmers form from their fuel supplier. This certificate is similar to the provincial form already on file, which allows a farmer to purchase dyed fuel in the first place.
Limiting the exemption according to where fuel is dispensed doesn’t make sense, but it’s what happens when the federal government tries to impose a tax that doesn’t take into account the differences in provincial regulations. For example, in Ontario, farm fuel can’t be used in vehicles licensed to travel over public roadways, but it can in Manitoba. When you’re sitting in Ottawa, it’s easy to think that this is the way to ensure farm fuel is used only for farming activities, but I don’t see how sending more fuel trucks out on deliveries is in line with government’s stated goal of reducing greenhouse gas emissions.
In the big scheme of things, the tax isn’t huge, at least not in the beginning. On diesel, it will amount to $51 per 1,000L of fuel in 2019. At the end of four years, it will grow to $134. To just exempt all farm fuel from the tax wouldn’t really take a lot out of the government’s coffers. For farmers, price takers in an international market, the problem isn’t just paying carbon tax on the fuel they burn, it’s the layering of taxes all across their supply chain. It’s the slight increase in the cost of getting seeds to warehouses, the slight increase in the cost of getting fertilizer to the farm, the slight increase in the cost of taking cattle to pasture, the slight increase in the cost of hauling products to markets.
Regardless of where a farmer dispenses their fuel, if it’s being used for eligible farming purposes, it should be exempt from the new tax. It seems like the government has taken something relatively simple and made it more complex than it needs to be.