Say what? No coloured diesel tax exemption?

By Brandy Harrison
PRINCETON — If the newly-minted environmental commissioner convinced Ontario to do away with the coloured diesel tax break, Reg Gurney would see his fuel bill shoot up at least $1,430 per month during peak use at planting and harvest when he uses more than 10,000 litres of diesel in one month.
“It all adds up. We (would) have to absorb that extra cost,” says the Princeton crop farmer, stressing that farmers are price takers and can’t pass the higher cost to buyers. “You can’t say I need five cents more to make money today. They’ll laugh at you.”
After a 40-year career as an environmental lawyer, Dianne Saxe took the reins on Dec. 1 from former environmental commissioner Gord Miller, who ran for the Green Party of Canada in the last federal election.
Saxe put a bull’s-eye on the 14.3-cent per litre provincial fuel tax exemption for unplated farm equipment but also unlicensed construction, forestry, and mining equipment and commercial marine vehicles. She told the National Post that the diesel tax exemption is a $190-million per year subsidy for “the better off.”
Ontario Federation of Agriculture president Don McCabe met with Saxe on Jan. 13 to make the case for coloured diesel. “We buy retail and we sell wholesale and pay trucking the whole way,” said McCabe an Inwood crop farmer with 80 acres, explaining why farms need the exemption. “We’re some of the best environmental stewards out there.”
McCabe says the $190 million was incorrectly labelled an agriculture-only subsidy.
“Unfortunately, she got some bad advice here,” says McCabe, emphasizing Saxe can only advise government. “She cannot change legislation.”
In a high-fixed cost industry, 14.3 cents per litre is tough for farms to swallow, says BFO feedlot director Joe Hill.
“We’ve got a lot of money invested in land, equipment, and livestock and we work on a very small return on that investment. It all comes out of that little margin we live off,” says the Centre Wellington crop farmer and feedlot operator.
Losing the exemption would increase cost of production, putting farmers at a disadvantage compared to their competition in other provinces and state-side, where diesel fuel is already cheaper, says Grain Farmers of Ontario director Dave Park. Ultimately, losing the exemption could drive down production, says the Sarnia crop farmer.
“It would be a direct hit to the bottom line. We’re teetering on the edge of profitability as it is with Chicago futures prices depressed,” says Park, adding that farmers defending their livelihood is reflective of a new reality. “We have to be able to defend our practices at all times. We’ve been at this so long and don’t need new regulations to tell us what’s best for our soil and the environment because that’s where we make our living.”