taxes

[nock]

All taxes whether it be income taxe, business tax or direct taxes are passed on by inflation.Wages and prices go up for inflation.Even the C.D.Howe institute said that all monies paid by employers on behalf of employies is passed on.This includes CPP UI WCB etc.Can you imagine what effect this has on farmers;we are taxing our farmers right out of existance.Canada is one of the highest taxed countries in the World and this makes our farmers the highest taxed group of people in the World.Their are other countries that have close to our level of taxation but they get these taxes back to their farmers in the form of subsidies;its terrible when this has to be called a subsidy when its just returning excess taxes that are passed on to their farmers.Their is always going to be some taxes but the exess taxes in Canada would amount to 30% of all farm expences.So you see it is not low commodity prices that are killing our farmers it is taxes.Unions say the first thing on wage demands are increase in taxes.Busineses are taxed 27% and they say they pass this on.Income taxe is passed on by increase in wages by inflation and we have lots of direct taxes in fuel and fertilizer.It is not hard to see why we have no farmers left.

[flatbroke]

I couldn't agree more. My wife and I operate a modest grain and cattle farm, which would support itself and us quite well, but thanks to comrade Chretien and his buddies in Stalingrad, we must also hold down two jobs each just to pay taxes (1/3 of which is taken immediately as well) It further sickens me when they have the gall to say there is no farm income crisis, even if they did have the money for support, and at the same time contemplate huge tax breaks and direct subsidies for hockey teams etc. I guess it's good to know where we stand in order of importance...

[jwright]

I can't say that I understand what you are saying. Canada isn't close to having the highest taxes in the world, we're about the lowest in the industrial world, not counting the US. Income taxes don't get paid if we don't have an income. A twenty percent decrease in taxes wouldn't make much difference to me, but a twenty percent increase in commodity prices would make a big difference. Somehow there is this whole industry out there that sees taxes as the end of the world, but in fact, taxes make it possible to put money where it's needed, for example to help farmers hit by the unfair trading practises of other countries. The big businesses and wealthy individuals who pay for the tax reduction lobby (industry) are the same ones who benefited bigtime from the massive subsidies to big business in the seventies and eighties, and the high interest rates of the eighties.

[noelm]

I posted a reply to your message a few days ago, but for some reason it does not seem to have shown up. I am a little confused by your statement that all expenses, taxes, wage increases, etc. are passed on. Who are they passed on to? I realize taxes can be burdensome, but in businesses I have run over the years, I have not paid income tax unless I made income. It is the same with my farm. Farm land taxes might seem high, but when I lived in St. Albert, Alberta a few years ago, I paid $3000 per year property taxes on my house. When I bought the family farm, 400 acres with a modern house, shop, garage and large barn, I paid $800 per year. Seemed real cheap to me. Noelm

[lunden]

I don't disagree that our tax system may contribute to some of the income problems facing farmers; however, I don't think it's the only cause. The situation is a combination of factors including over supply of certain commodities, European and US subsidies, lack of purchasing power in countries that were formerly our customers, changes in technology and changes in consumer demand in Canada.

[jwright]

Would you agree that energy prices are a factor? Farmers make money by converting free solar energy into food using plants and animals. Cheap (yes cheap) fossil fuels makes it easy to over produce. The European prosperity that makes it possible for them to subsidise food exports is, I believe, the direct result of the development of North Sea oil and gas in the seventies, which broke the back of the OPEC cartel and created a glut of cheap energy, which in turn created a glut of food. When energy prices rise, the farm crisis will disappear, (although the people who depend most on cheap energy will suffer). In my opinion.

[noelm]

Interesting comment on energy prices (cheap energy causing over-production). I just got the latest issue of the Canadian Association of Agri-Retailers magazine yesterday, and it had a comparison of how much labor-time it has taken to produce 100 bu. (5 acres) of wheat over the years. In 1830 it took 250-300 hours. By 1890 with increasing mechanization that had dropped to 40-50 labour-hours. 1930, with tractors, combines and trucks saw it drop to 15-20 labour hours (ie fossil fuel energy had entered the picture). By 1990, with large, fossil-fuel driven mechanization, it took only 3 labour-hours to produce 100 bushels of wheat. Of course plant breeding, use of fertilizers (320% increase in fertilizer use between 1967-1997) have been a part of the increased production as well. Over the same time (1830 to 1990) the percentage of the population required to provide food (ie farmers) has plummeted. With increasing technology, and a handful of crops being produced, you just don't need as many people producing them. Biotech companies say their new crops will help farmers by allowing them to produce even more of the same handful of crops. Judging by history, I would say the biotech crops are simply going to drive more people off the land. I believe our idea of more and bigger technology always being better is a mistake. What we should be focussing on is appropriate technology to help us create the kind of economies and communities we want. It is not as difficult as it sounds. The difficult part is clarifying exactly what we want, before deciding how to create it!

[jwright]

Noel, leaving aside for a moment the risk from biotechnology, don't you think that the real benefit from biotechnology isn't productivity, but new products? I can think of lots of ways that biotechnology will boost production and surplusses, but also ways that it will create new products and create new jobs in agriculture. I wonder if the reason that production hasn't exploded in eastern Europe (incl Ukraine, former USSR) is that they haven't been able to generate the capital to buy the expensive machinery needed to take full advantage of the cheap energy sources.

[noelm]

Jim, I agree biotechnology will introduce new products, but that is not necessarily a good thing for current farm families if they cannot adjust to the new conditions. (Contracting production, far more competitive conditions, quality, not quantity being the measure of success). I have a more detailed description of the possible new scenario in the article 'Biotechnology Will Change the Way Farming is Done' that you can find at Agri-ville's home page, or on my web page of articles and commentaries (www.ravenseyeconsulting.com) Regarding Eastern Europe, my understanding from talking to folks who have travelled and worked there is that the sociopolitical system has been more of a problem as far as production goes than lack of equipment, especially in the past. Estimates were that up to 25% of the crops were lost in storage and transit, which was more than the USSR imported from the rest of the world. I remember hearing an Eastern European trade expert with the CWB saying some years ago that if the USSR could get its internal grain management system corrected it would be exporting grain. I don't know what the conditions are there today.

[jwright]

Noel, I agree. Most of the benefits of biotechnology are going to accrue to the owners of the patents. There are going to be vast accumulations of wealth on the part of the people who own the patents. On the scale of Microsoft. That will give them incredible power. If my rough calculations are correct, Bill Gates has enough money to buy all of the farmland in Western Canada, though he would need a mortgage.