In response to the question put forward to the Minister of Finance concerning woodlot owners affected by hurricane Juan, the minister requested that officials from the Department of Finance examine the proposal by the hon. member for South Shore of allowing woodlot owners to defer, over a 10 year period, income tax on revenues obtained from having to sell timber felled by hurricane Juan.
In its analysis, the department identified a number of concerns with that proposal. The measure could lead to inequities in the treatment of other taxpayers who experience other forms of economic loss from natural disasters, for example, forest fires, droughts, hailstorms, tornadoes and floods, or who experience income fluctuations from other causes. As well, providing a 10 year income tax deferral for woodlot owners would require the development of a number of complex rules to ensure that the measure functions correctly.
In the past, program spending approaches have been used instead of the tax system to address the effects of natural disasters such as the 1998 ice storm. Consistent with that approach, on March 4, 2004, the Government of Canada announced payments to the province of Nova Scotia through the Disaster Financial Assistance Arrangements, DFAA, including $4 million for the effects of hurricane Juan. Under the DFAA, the Government of Canada cost-shares with provinces eligible expenses incurred to repair the damage from a disaster. Provinces choose how to direct assistance to disaster victims through their programs and the Government of Canada makes payments to the provinces for a portion of the expense of those programs.