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Don't cut taxes of wealthy Manitobans

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Flooding is turning out to be the provincial government's millstone, costing more than $1 billion last year alone. Future flood-protection investments are predicted to require an additional $1 billion.

Having to deal with natural disasters throws a wrench into the works because they cannot be ignored. So it is not surprising that a series of floods forced this government to look for a way to increase revenues.

The 2013 budget brings in a new Manitoba Building and Renewal Plan to raise revenue dedicated to infrastructure, including flood protection. As of July 1, the provincial sales tax will increase to eight per cent. This spending will be welcome by all sectors of society but, necessary as it is, we need to keep in mind sales taxes are more regressive than income taxes, which this government continues to decrease.

In the 13 years since the NDP government took power, more than $1 billion in personal and corporate taxes have been cut from the provincial budget. This year, the tradition continues.

There is another deduction in the basic personal income tax exemption that removes $20 million from revenues. Low, middle and upper income-earners alike will benefit from this deduction. Although the relief to low-income Manitobans is welcome, higher-income Manitobans should not be included. The constant bleeding of revenues is preventing government from dealing with other insidious but less spectacular problems than flooding.

Poverty and inequality impact society broadly, not just those who struggle with low incomes. This is the second budget cycle in which many community organizations and coalitions have been calling for an increase in the shelter allowance (to at least 75 per cent of median-market rent) so the many welfare recipients who have to rent in the private market can afford decent places to live.

Last year, the Canadian Centre for Policy Alternatives estimated $20 million per year, or 0.18 per cent of the total budget, would make a significant difference in shelter allowances.

Using 2012 figures, the average rent for a one-bedroom apartment in Winnipeg was $704; a two-bedroom, $911; and a three-bedroom, $1,027.

Rental allowances do not come close to matching these rents: For a two-person family it is $387; for a three- to four-person it is $430 to $471 and a four-to six-person family, $471 to $513.

In spite of the collective call for a meaningful increase in shelter allowance, this budget has increased rental allowances by only $20 a month.

The seniors education property-tax credit will effectively remove another $6 million from revenues. This year's credit only applies to those with incomes below $40,000. But there is a commitment to phase this credit in to include all seniors, which will cost an estimated $50 million by 2015.

In light of the challenges facing the education sector, extending the tax credit beyond low-income seniors is not sound policy, especially given this is a demographic group set to grow so much in the coming years.

Although transfers to post-secondary institutions have increased by 2.5 per cent, this is less than the five per cent per year that was supposed to be allocated over three years (this being the third). Had revenues not been reduced so much over the past 13 years, the province could have kept on track with its three-year plan. This reduction no doubt will cause universities to further increase fees students pay above tuition.

There are a few positive measures in the 2013 budget that will help deal with inequality. There is a "new three-year commitment for 500 new social-housing units and 500 affordable-housing units over three years" and a tax credit for development of private rental housing. The eight per cent tax credit will apply to new rental developments with at least 10 per cent of the units with rents at or less than affordable rental rates. Improvements to rent regulations appear to offer some relief to tenants in units that are renovated. There is to be new spending in early-childhood development and parenting support.

The minimum wage will increase to $10.45 an hour. The NDP government has done much to increase the minimum wage, with increases steadily more than inflation. Nonetheless, a minimum wage is not a living wage.

Unfortunately, this government is much more swayed by the anti-tax, small-government, anti-deficit crowd than it is by its own successes. Whether through the attacks of business and their lobbyists or the anti-public-sector tirades of the media, this government gives far too much credence to spin and rhetoric instead of boldly using its power to help the disadvantaged.

The tide is turning on tax reductions; both the B.C. Liberals and NDP are promising to increase taxes. There is a growing public understanding that governments are running deficits because they are not collecting enough revenue, not because they're spending too much.

Lynne Fernandez is the Errol Black chair in labour issues at the Canadian Centre for Policy Alternatives, Manitoba.

Republished from the Winnipeg Free Press print edition April 20, 2013 A17

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