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OFA supports harmonized tax, wants farm exemption

CHESTERVILLE — The Ontario Federation of Agriculture has endorsed the planned harmonization of the provincial retail sales tax and federal goods and services tax, although the organization also says it wants farmers to remain exempt from Ontario’s eight per cent levy at the till.

"Our first push will be for continued point-of-sale exemption using the OFA card," OFA vice president Mark Wales told The AgriNews in April. "Why can’t it be done?" Wales rhetorically asked, suggesting that software techology should make it possible to reduce the new harmonized single sales tax by eight percentage points when a farmer presents his card at the cash register, on the purchase of farm-related produced.

However, the province "may find 1,001 reasons not to do that," conceded Wales. In that case, farmers would apply to get their HST back on their business input costs, as they currently do with the GST, he pointed out. Supporting that policy outcome is the OFA’s "fallback position" on the issue, he said.

OFA researcher Terry Cowan added that the organization wants Ontario’s HST paperwork to be printed with the farmer’s Farm Business Registration number to make it "very, very easy" for HST auditors to know when they’re dealing with a farm. "The FBR number would be extremely useful for the person doing business, and the auditors."

As well, under the HST, Ontario farmers will save millions of dollars on certain items on which they currently enjoy no provincial sales tax exemption, according to Cowan. That includes office supplies, water treatment chemicals like chlorine and new farm trucks and vans. He estimated the agricultural sector’s total annual savings at up to $30-million.

Farmers would have to get used to having their provincial tax rebates tied up with the government for six to eight weeks, as with the GST system, he noted, which is why the OFA hopes to keep the point-of-sale exemption.

But from an administrative point of view, "the vast majority of farmers are GST-registered now, so they’re not going to see a great shift in the paperwork burden," he said.

Higher taxes necessary, says OFA researcher

As for consumers, the HST will mean higher taxes, he said, with the province yielding "an extra half-billion or billion dollars more in revenue."

But Cowan argued that the money’s needed, suggesting governments have allowed taxes to fall too low relative to the services rendered to the public. "Our expenditures [as a province] have been going up," he noted.

"For farmers, it [the HST] will be a good thing; for the government, there is some additional revenue; for ordinary taxpayers, they will be out of pocket an extra few hundred dollars."

Note: SST

While the new harmonized tax is popularly reported as ‘HST’ the McGuinty government actually uses the term single sales tax — SST.

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