UPDATE – Federal: CPA continues to push for full exemption for propane under GGPPA

The CPA is continuing to seek a full exemption for propane under the Greenhouse Gas Pollution Pricing Act in the provinces where the Act applies, namely Alberta, Saskatchewan, Ontario and Manitoba. 

In her December fiscal update, federal Finance Minister Chrystia Freeland recognized the important role propane plays in farming operations by announcing a fuel tax rebate.  However, the effect of the rebate is that it only partially levels the playing field, which illustrates that much more work needs to be done. 

The good news is that returning fuel charge proceeds go directly to farming businesses in backstop jurisdictions via a refundable tax credit, starting in the 2021-22 fuel charge year. 

Before the introduction of the tax rebate, using propane was at a disadvantage relative to gas and diesel, which are both specifically listed as exempt “qualifying farming fuel(s)” under the GGPPA where the fuel charge is not payable on either fuel when being delivered to a farmer, per subsection 17(2)(a)(iii) of the GGPPA Act.  

However, the CPA continues to be concerned that the tax rebate measures announced by the minister provide limited benefit for certain parts of the farming sector, particularly for crop drying applications. In a January 18 letter to Minister Freeland, Interim CPA President Allan Murphy noted that for crop drying for example, “the rebate falls far short, and the benefit is minimal. According to the Grain Farmers of Ontario, the tax credit returns less than 20 per cent of the costs incurred to farmers for crop drying.” 

As Murphy outlined in his letter, the CPA strongly believes that the only solution that will offer relief to farmers and reduce GHGs is an exemption for propane. “It encourages switching away from carbon-intense fuels such as gasoline and diesel, provides tax relief for all farmers, and reduces the administrative burden for farmers as they would simply have to provide the current exemption certificate to their suppliers on a remodified 402 Form - Fuel Charge Exemption Certificate for Farmers that includes propane.” 

Murphy indicated that the CPA will be in contact with the minister’s office to arrange for a meeting to further discuss this issue.