Minister denies harmonized tax affect sale of farms

A harmonized sales tax or HST will have no affect on the sales of farms, according to Leona Dombrow­sky.

The Minister of Agriculture, Food and Rural Affairs said in an interview on Tuesday morn­ing of such a charge, “It’s another example of not doing the homework or the math – or both.”

She was responding to a claim made in the legislature last week by Conservative MPP Ernie Hardeman, the opposition’s agriculture critic. Hardeman said with Premier Dalton McGuinty’s pro­posal to harmonize the Provincial Sales Tax with the Goods and Services Tax, farm­ers will now pay a 13% sales tax on farmland.

Hardeman stated in a press release, “OMAFRA sent out information explaining that even farmland is going to be part of the tax grab. That means that farmland in Ontario will have a 13% sales tax. Imagine the young farmer, who is just starting out and doesn’t even have a GST number yet, now having to pay 13% tax on the purchase of the farmland.”

He said the GST and HST info sheet distributed by OMAFRA stated the sale of farmland by an individual is subject to GST/HST except for “limited circumstances.” The fact sheet cited a number of examples, such as the sale of a farm to a daughter who will have to pay the HST if she chooses to farm it.

But Dombrowsky said Hardeman’s interpretation of the information sheet is incorrect, and as the province moves to harmonize the tax, farmers will actually gain many benefits, such as no tax on farm vehicles and equipment or other goods such as freezers or computers.

Plus, she said, if a farm property is transferred to a family member, and that in­cludes a father and son, uncle and nephew, or between sib­lings, “There’s no tax on that transaction.”

Hardeman charged, “If you are selling the farm to your neighbour – whether he farms it or not – he will get hit with 13% ‘DST,’” calling the new levy the Dalton Sales Tax.

“At $10,000 dollars an acre, this will add $80,000 to the cost of a 100 acre farm." 

But Dombrowsky said that when a farmer sells his farm today to a non-relative, he would charge the GST and it would be rebated. “When we move to a single sales tax, it will be rebated – so the net cost is zero.”

She said that the HST effect on selling homes has similar disinformation. It will be levied on a sliding scale for homes costing over $400,000, and will take full effect for homes costing $500,000 or more. She noted that in Ontario, 93% of home sales are under $400,000, and so there would be no tax, and 97% of home sales are under $500,000.

Dombrowsky said, “:This single sales tax (HST) is treated the same as the GST is now.”

She said that means the tax gets collected and paid, and rebates are issued quarterly, so there is only a short wait to get a rebate.

Dombrowsky said it is “inaccurate to say it hits a particular group.”

But during his statement Hardeman pointed out this is only one of the ways that the new will negatively impact farmers. He said farm families will have to pay an increase of 8% on items they use every day from – their morning coffee to gas to drive the family car to Newspapers. In addition the loss of a point of sale ex­emption for sales tax will result in many farmers increasing their borrowing while they wait for rebates.

"How can anyone believe that this government supports new and young farmers when they add to the start-up costs like this?" said Hardeman.

"Do the right thing for farmers, seniors and families and scrap the Dalton Sales Tax."

Arnott: nobody is sure

Wellington Halton Hills MPP Ted Arnott said in an interview on Tuesday morning that he is somewhat surprised Dombrowsky can speak of what will be in the legislation and how it will work because the Liberals have yet to bring it before the legislature.

“There are more questions than answers,” Arnott said, adding that every time he asked the Minister of Finance Dwight Duncan about the details of the proposed HST, Duncan prefaces his remarks with “It is presumed that … ”

Arnott concluded, “They don’t even know” what the new tax will do, and added that gives the opposition an opportunity to point out flaws in the tax’s implementation.

He also noted that lowering a tax around election time is a tactic that does not always work. He cited his first campaign, in 1990, when Liberal Premier David Peterson, who had raised the PST to 8% from 7%, saw his poll numbers dropping during the election campaign, and announced he would cut that tax. Instead, the Liberals were turfed and Bob Rae’s NDP came into power.

Arnott also noted the original GST was proposed to be at 9% and then was dropped to 7%. That did not save the federal Progressive Conser­vatives, who were reduced in 1993 to two seats in parliament.

Arnott concluded, “You can play games with this, but people want a fair level of tax.”

He added of Dombrowsky’s comments, “She may say that at this point in time, but I’m not sure she can back it up.

There will be a PST and GST seminar offered in Guelph on May 28 from 1 to 4pm  at the Guelph-Wellington Busi­ness Enterprise Centre, 401-42 Wyndham Street North, Guelph N1H 4E6. To register, call 519-826-4701.