Mr. Speaker, I am proud to represent the farmers and ranchers of Kootenay—Columbia who are faced with the specific problem sourced and created by the Liberal government that relates to all farmers and many Canadians across Canada.
Ranching and farming are not nine to five jobs. They involve long, hard hours and hard work often seven days a week. Many farms and farmers have people off farm working in town at other jobs and using that money to subsidize the farms.
I am referring to the way in which Revenue Canada, under the control, jurisdiction and direction of the Liberal government, is “helping farmers” off the farm. It is bloodthirsty. It is making changes to the law retroactively. It shows absolutely no compassion or conscience while it is holding up the bank by robbing farmers of money they need to pay off bank loans and try to keep their heads above bankruptcy year after year.
Let me give the specifics of a case. I believe they would apply to all ranchers and farmers across Canada. In my constituency ranchers and farmers are cutting timber to enhance grazing or farmland. They consulted national and local accounting firms on how the money would be treated by Revenue Canada. They based their decision to proceed with the timber cut based on information confirmed by Revenue Canada.
In 1996 and prior years accountants confirmed with Revenue Canada the money was to be reported under capital gains and taxed accordingly. These are operations which do not normally depend on the cutting of timber for their livelihood but may exercise the option once or twice during the ownership of the property. It should be noted that from the cases received in my office not one individual purchased the property with the intent to remove the timber as a continuing trade or source of income.
In the 1996-97 year Revenue Canada made a decision to review a number of tax returns reporting money derived from timber sales and issued approximately 50 questionnaires to ranchers and farmers who had reported money from timber sales. An additional 50 questionnaires in early 1998 came out and more are anticipated. These tax returns were determined from cross-checks of names from the timber mark office in Victoria and Revenue Canada files. The timber mark list was obtained through a general memorandum of understanding between Revenue Canada and the province of B.C.
The 1993, 1994, 1995 and 1996 tax years were reviewed and reassessed according to the new interpretation by Revenue Canada. In June 1998 the Tax Court of Canada heard a case called the Larsen case and a decision was made in July in favour of taxpayer Larsen.
A decision has been made by the Minister of National Revenue to appeal the decision, which would require the case to be heard by the Federal Court of Appeal. A recent letter received in my office on another issue signed by the minister stated that where a taxpayer disagrees with the department's decision an appeal may be filed through the Tax Court of Canada.
The tax court is an independent tribunal and provides the appropriate means to settle an honest difference of opinion between Revenue Canada and the taxpayer. It is to be noted that the tax court found in favour of my taxpayer.
Similar cases were heard by the tax court in the early 1950s and 1970s and rulings were also in favour of the taxpayer. Even with that history, Revenue Canada insisted on presenting its case again and spending more taxpayers dollars fighting the hand that feeds it, the hand of the taxpayer.
Revenue Canada says there has not been a change in the legislation in question. The reason for the audits being done in 1996 and 1997 and to continue in 1998 is that in the past the amounts received from the sale of timber taken off the properties was insignificant according to Revenue Canada definition and therefore was never questioned as to whether it was treated as a capital gain against the cost base of the property.
In the 1990s the dollar value in the sale of timber has increased. Therefore Revenue Canada no longer considers the amounts to be insignificant. Consequently it is questionable if the amounts can be treated as a capital gain against the cost base of the property.
Initially our office was advised by Revenue Canada staff that the reassessments were nationwide and B.C. was the last area to be reviewed. It should be noted that this problem is not just a problem in British Columbia in my constituency. It is also a problem in the maritimes.
The point of my presentation is that the Liberals talk all the time about how they are helping people, how they are serving people. It was pointed out during the tenure of John Turner, when he was temporary prime minister of Canada, that serving the public is also a term that can be used for bulls.
A case scenario is one where there is a partnership of three individuals who were all reassessed. The initial appeal of capital gain treatment was rejected. The accountant was advised by Revenue Canada that the money should have been treated as revenue versus losses. These people are in a position where it will cost them more money to fight Revenue Canada than it would for them to comply with this reassessment by Revenue Canada.
A second case is of a retiree who is in a position where he is just not able to service the extra load dumped on him by Revenue Canada. We are talking about a potential bailout by the Liberals of a specific problem. I am talking about the problem for all ranchers and farmers across Canada, that Revenue Canada fundamentally is out of control when it does retroactive tax grabs. This is what I am speaking about.
The Liberals have to get it right. They have to treat ranchers, farmers, all taxpayers fairly.