Local

Winnipeg Free Press - PRINT EDITION

Manitoba tax policy costs us millions

Province won't index incomes for inflation

By: Larry Kusch

Posted: 12/28/2012 1:00 AM | Comments: 0 | Last Modified: 12/28/2012 10:18 AM | Updates

Colin Craig (KEN GIGLIOTTI / WINNIPEG FREE PRESS ARCHIVES) Photo Store

A tax watchdog says the province's continued failure to index personal income taxes for inflation will cost Manitobans millions of dollars in 2013.

Manitoba is one of only three provinces -- Prince Edward Island and Nova Scotia are the others -- that allow for the phenomenon known as "bracket creep."

That's where the province takes more of your money by failing to adjust tax brackets for inflationary wage increases.

"The sad reality is Manitoba is still facing this secret form of taxation," said Colin Craig, a Prairie spokesman for the Canadian Taxpayers Federation. "It's no secret that the average Joe has no idea it's going on."

Craig said Manitobans will still pay the province's highest rate of income tax (17.4 per cent) when their incomes reach $67,000 in 2013. That hasn't changed since 2009. In Saskatchewan, the highest provincial tax rate (15 per cent) won't kick in next year until incomes reach $122,589.

The basic personal exemption for 2013 in Manitoba is $8,884. In Saskatchewan, it's $15,241.

"The difference between Manitoba and Saskatchewan now is pretty stark," Craig said.

According to the taxpayers federation, bracket creep will cost Manitobans earning $45,000 an extra $11 in 2013. Those earning $80,000 a year will pay an extra $71. In a single year, the totals are tiny, but they add up over time. According to the taxpayers federation, the cumulative effect in the past decade for someone earning $45,000 is $160 a year in extra income tax. For someone earning $75,000, it's an additional $550 annually.

The Selinger government noted Thursday that basic tax exemptions will rise by $250 for Manitobans in 2013. The increase applies to the basic personal amount as well as the spousal amount for married and common-law couples and the eligible-dependant amount for single parents.

"With these increases, another 5,500 Manitobans will be removed from the tax rolls and the savings will total $19.1 million," cabinet press secretary Sally Housser said in an email.

Meanwhile, higher Canada Pension Plan and employment insurance rates will eat into paycheques across Canada, beginning Jan. 1.

Canadian workers earning $45,000 a year will pay an extra $84 in CPP and EI contributions, according to the taxpayers federation. Those earning at least $47,400 will contribute $891.12 in EI premiums in 2013, up $51.50. Employers will pay $1,247.57, an increase of $71.61.

larry.kusch@freepress.mb.ca

Comparing tax bills

Comparable tax bill on taxable income of $50,000*

British Columbia $8,685

Alberta$9,659

Saskatchewan$10,402

Manitoba$11,225

Ontario$8,887

Quebec$11,544

New Brunswick$10,454

Nova Scotia$11,294

Prince Edward Island$11,252

Newfoundland$10,350

-- source: Ernst & Young

*Combined federal and provincial income taxes for each jurisdiction, based on rates as of June 30, 2012.

Republished from the Winnipeg Free Press print edition December 28, 2012 A4

History

Updated on Friday, December 28, 2012 at 10:18 AM CST: adds photo

Factual inaccuracy? Something missing? Help improve our journalism.

Know about news? Share your story suggestions, photos and video.

Spelling error? Punctuation problem? Send us an email if you’ve found a typo.

More Local

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.