The sales tax on seeds counteracts a lower carbon footprint, experts and home growers say

Nicola Moore says it was the pandemic that sparked her interest in growing food.

“My parents always had a garden my whole life,” she said. “I never put two and two together until I had a family of my own. And then as we went through the pandemic, I think it was 2020, I got scared and wasn’t sure how to feed my family breakfast, lunch and dinner every day.

“And, you know, the grocery stores had long lines and I just wasn’t sure about that. So I thought how can I help my family? And that was learning how to grow my own food.”

Moore grows beets, beans, carrots, cucumbers, peas, radishes, lettuce, onions, peppers and tomatoes both at home in Hamilton, Ontario and at a nearby allotment site.

“It’s been two years of steady learning, gardening and research, and now my next level is canning and preserving for the wintertime.”

According to Moore, the savings are substantial. But they’re also smaller than they could be, since both the seeds and seedlings she buys to start her garden are subject to provincial and federal sales taxes, while food grown from the same seeds is imported into Canada or can be transported to cities long distances, are not.

“If you look at our recent statistics, it seems like the rate of gardening in Canada is at an all-time high,” said Sylvain Charlebois, scientific director of the Agri-Food Analytics Lab at Dalhousie University.

“People want to grow more food for a variety of reasons. One of them is taking pride in the food they grow. You want to do more for yourself. You want better quality. They want to reduce the carbon footprint of our food systems Many, many citizens actually also want to grow food to save money.”

The tax system, says Charlebois, works against them because while a lettuce imported from California and sold in the supermarket isn’t subject to sales tax, a baby lettuce grown in Canada and planted in a home garden is taxed.

Canada’s carbon tax may not be popular in all circles, but it penalizes those who have larger carbon footprints while rewarding behaviors that reduce them.

But Canada’s food sales tax regime does the opposite, offering tax benefits to those who have larger footprints while taxing those who reduce them, creating a “perverse incentive” that economists call “false incentives” that in the contradict the CO2 tax.

truck dependent

Canada depends heavily on fruit and vegetables imported from outside the country at a significant environmental cost.

“The carbon footprint is quite significant,” said Charlebois. “That’s how we eat. We transport things.”

Canada’s climate makes it difficult to substitute all of the edibles from places like California and Mexico, but Charlebois says experienced growers can time their planting and harvest so that different edibles ripen at different times in the spring, summer, and fall.

“There’s no carbon footprint when I go into my garden and plant the seeds,” Moore said. “Imagine a truck or trucks or fleets going from California to Ontario.”

Most Canadians rely on supermarkets and grocery stores year-round. Even in the summer months, when much of the produce comes from Canada, it still comes from commercial growers that use fertilizers that release large amounts of nitrous oxide. Agriculture accounts for about a tenth of Canada’s total emissions, and much of its food is transported long distances.

Studies have shown that food consumed in North America travels an average of over 1,500 km before it ends up on the plate.

Food inflation, shorter shelf life

Recent supply chain problems have pushed up fruit and vegetable prices by about 10% in a year, three times faster than hourly wage growth. Delays in the supply chain have also caused the lesser known phenomenon of “shelf binding”.

“A lot of the produce that ends up in the supermarket isn’t as fresh as it used to be,” says Charlebois. “You buy onions, carrots and tomatoes that are a little softer than usual. And instead of having seven days to eat certain products, you only have two days. And if you don’t eat it, you have to throw it away one way.”

“Since COVID started, this has happened more frequently due to work issues, COVID restrictions and things like that. Moving something on water or land takes longer, and that creates more waste.”

As a breeder who breeds plants specifically for seed, Catherine Wallenburg has observed the growing interest in garden planting.

Catherine Wallenburg, a breeder who breeds plants specifically for seed, shows a selection of her products that are subject to sales tax in Canada. “When I first started the retail business and looked at how the product worked, I was actually quite surprised to find out that it was a taxable product,” she said. (CBC)

In her greenhouse in Farrellton, Quebec, she seeds, then settles and cleans lettuce, kale and other plants to sell them under her Northern Seeds label.

“When I first started the retail business and looked at how the product worked, I was actually quite surprised to find out that it was a taxable product. To me it just seems to say that growing food is considered a hobby because the same produce would not be taxed when fully grown.”

At least one province, British Columbia, does not levy taxes on either seeds or crops.

The federal government has eliminated sales taxes on both feminine hygiene products and face masks in recent years, but says it has no plans to change the food tax system.

A high threshold

“Farmers do not pay GST on a list of selected core items used in their farming operations, including bulk purchases of seed used in the production of food,” Treasury Secretary Adrienne Vaupshas told CBC News.

Only farmers who buy in commercial quantities (at least 2,500 small seeds such as lettuce or 5 kg of larger seeds such as beans or corn) are exempt from the federal tax on seeds. “That’s a pretty high bar,” says Wallenburg. “Even some growers, for example gardeners, will not reach this threshold. So they may pay taxes for seeds.”

Gardeners can reclaim these taxes at the end of the year, but Wallenburg’s customers cannot.

“It’s a shame there’s no incentive to grow and eat locally, and there really isn’t anything more local than straight from your garden.”

Lots of reasons to grow

Moore says she grows food for reasons beyond cost.

“I think it’s an excellent way to involve your kids in the process, to teach them how your food actually grows, from seed to production. A lot of our kids today go to the grocery store, they get an apple or a peach, and they have no idea it came from a tree.”

Wallenburg says her customers have similar motivations: “Because it’s delicious, because it saves money, because it’s fun to be outside with kids.”

A tax system that discriminates against home growers is unlikely to change that equation for most, but Charlebois says the system could go beyond simply addressing injustices and actually encouraging people to do something that’s good for the environment, for their health and even is for the country’s food security and trade balance.

“From a fiscal perspective, I’m not sure we’ve done a good job of making sure there’s some consistency here across the board.”

“The fascination of recent years has been using taxes to discourage behavior, but we’ve never really looked at taxes as a tool to empower citizens to do certain things that are desirable, such as “

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