Farmers adjust to the federal carbon tax

Farmers adjust to the federal carbon tax
Apr 02, 2019

The tax came into effect on April 1

By Diego Flammini
Staff Writer
Farms.com

Several Canadians woke up April 1 to the implementation of a new tax.

The federal carbon tax came into effect in the four provinces without pre-existing carbon pricing policies: Saskatchewan, Manitoba, Ontario and New Brunswick.

Ontario operated under a cap and trade policy before Doug Ford’s government ended it in July 2018.

The federal tax will start at $20 per tonne and increase by $10 annually until it reaches $50 per tonne in 2022.

The new levy will add almost five cents to a litre of gasoline and about four cents to a cubic metre of natural gas this year. The cost of propane, butane and aviation fuel will also go up.

The tax will not apply to gasoline and diesel purchases that are stored on farms and used in machinery.

Producers are concerned with how the federal tax will affect their operations as well as other Ontarians.

All consumers will feel the effects of the carbon tax, said Arnie Small, a cash crop producer from Brant County.

The carbon tax is “absolutely stupid, crazy and a waste of money,” he told Farms.com. “The cost of lots of things is going to go up. It’s all going to increase the cost of production and is eventually passed on to the consumer.

“Take tire companies. Their costs are going to go up, so a tire that cost $800 now costs $820. Who pays that? We do. And from a food perspective, all the costs along that supply chain are going to go up, meaning the prices in the grocery store are likely to go up too.”

The federal government is promising annual rebates for households in Ontario and the other three affected provinces.

But Small isn’t confident the feds will hold up that commitment.

“They’ll take $10 from you and give you back $2 because they’ve wasted the other $8,” he said.

Some producers are more optimistic, however, as the Canada Revenue Agency is allowing farmers to apply for tax exemptions using form L402.

The potential exemptions and the removal of tax from fuels stored on-farm should be enough to manage life with the carbon tax, said Mike Kraemer, a beef and cash crop producer from Bruce County.

“I don’t know if the tax will affect much because we can claim it on the farm,” he told Farms.com. “We shouldn’t notice it too much that way in the operation.”

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