April is the time of year when thousands of Manitobans are finding out just how much the provincial government is taking from their pockets through personal income taxes.
In Manitoba, the provincial government is taking thousands more than the governments of neighbouring provinces, making it tougher and tougher to justify staying in Manitoba. There is no better comparison for personal income taxes than our neighbour to the west, Saskatchewan.
A Manitoba two-earner family of four making $60,000 will now pay a whopping $2,751 more in income taxes compared with the same family in Saskatchewan. That's a 4,337 per cent difference simply by moving across the border. And this gap is widening -- in 2013 it was only $2,464. The gap keeps growing because Saskatchewan, like other provinces, is moving faster and further than Manitoba when it comes to creating a competitive personal income tax system. This needs to change if we are to retain and attract Canada's best people.
One of the first fundamental steps the Manitoba government must take is to increase the basic personal tax exemption (BPE), the amount you earn before paying taxes. In 2014, Manitoba has the lowest provincial BPE west of Nova Scotia. This means Manitobans are paying income taxes far sooner than other Canadians. While Manitoba's BPE has had some small increases over the years, other provinces have seen their BPEs increase by leaps and bounds.
For example, the Manitoba BPE grew by $1,300 from 2007 to 2014 while Saskatchewan increased its BPE by $6,600. No wonder we're falling behind. Until Manitoba starts to seriously raise the BPE amount, it will be easier to get ahead in Saskatchewan.
Just as important as raising the BPE, the provincial government must also raise its tax-bracket thresholds to competitive levels. In Manitoba, the lowest tax rate ends at $31,000, a level that has increased by only $456 since 2007. By comparison, in Saskatchewan the lowest tax-bracket threshold has increased by $4,887 since 2007 and now ends at $43,292. This means more of your money is taxed at a lower tax rate in Saskatchewan.
The same problem exists at the other end of the tax range, too -- the highest Manitoba tax bracket kicks in at $67,000 while Saskatchewan doesn't start their top tax rate until you make more than $123,000. It's just more difficult to keep your hard-earned dollars in Manitoba than in Saskatchewan.
The provincial government might try to dismiss the need for income tax relief by focusing on Manitoba's "affordable" hydro rates and auto insurance, but that doesn't fix the problem. While it is true Manitobans pay less for utilities than Saskatchewanians, these savings are completely eaten up by higher taxes.
According to the 2014 budget, our sample Manitoba family of four pays $451 less in government-run utilities, but they pay $2,751 more in personal income taxes. This results in an overall disadvantage of $2,300 for Manitobans, enough money to pay the mortgage for a couple of months or pay for a child's hockey season. Manitoba can simply not afford to keep this uncompetitive tax system.
Providing tax relief to Manitoba families through personal income tax reform is desperately needed to create a province that allows families to get ahead. The Manitoba government once recognized that burdensome personal income taxes were a real problem and brought forth a comprehensive plan in 2007 to reduce them. Unfortunately, that plan was never completed and all Manitobans are now paying the price.
Elliot Sims is the Manitoba director of provincial affairs with the Canadian Federation of Independent Business.