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The Tories, Crowns and taxes

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This is a tough one to get your head around.

It’s an even tougher one for the Tories to sell to voters in a few sound bites.

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On the one side, you have Hugh McFadyen’s Progressive Conservatives accusing the NDP of playing a shell game with the province’s finances and the other you have Auditor General Carol Bellringer saying otherwise.

McFadyen says the books are in such bad shape, the NDP have no alternative but to raise taxes to raise more revenue if they want to balance the budget by 2014.

McFadyen says if he becomes premier, his Tories won’t be able to balance the budget until 2018. Those four extra years will avoid a tax increase by reducing spending.

The NDP refute this, saying they are ahead of track on balancing the books, mostly because of Manitoba’s healthy economy.

Last week, I spent 20 minutes on the phone with Eric Stefanson, former finance minister under Gary Filmon’s Tory government in the 1990s.

He explained, patiently, why this is such an important issue for the Tories and should be for Manitobans.

The PCs also supplied the paperwork to support this, and Stefanson guided me through it.

The difference has to do with what’s called the core budget—the taxpayer-supported budget that deals with direct government services like healthcare, justice and education—and the summary budget, the budget that includes everything else under the government umbrella, like school divisions, universities and Crown corporations.

The smoking gun for the Tories is on page 4, Details and Reconciliation to Core Government Results. The blood on the floor is money moved from Manitoba Hydro ($150 million) and the Workers Compensation Board ($64.1 million) into the summary budget.

According to Stefanson, those combined payments ($191.8 million) went to improve the province’s bottom line and reduce the summary deficit, which sits at about $298 million.

"They really are not part of the core government," Stefanson said of the Crowns. "They really are funded by ratepayers."

Without that $191.8 million, the deficit is actually almost $490 million, Stefanson said.

Stefanson’s second point was on another page, Loans and Advances. In particular, loans and advances to Crown organizations and enterprises like Manitoba’s post secondary institutions.

The money, roughly $400 million, will only be repaid to government through future appropriations, according a note at the bottom of page 114 of the Summary Financial Statements.

"What should be really important, I think, to Manitobans is this distinction," Stefanson said. "These advances, by and large, can only be funded in one way, because we’re running deficits, they’re being funded by debt. "I think what gets lost sight of, which is really the most important issue, is what’s the impact to the taxpayers of Manitoba. What’s happening to the real deficit? What’s happening to debt in Manitoba?

"You look at the gap that has to be closed, it can’t be done without increasing taxes."

Then there’s the impact of the flood fight on the books plus the future of federal equalization payments to Manitoba. Then there’s the economy, and how much of it is actually driven by public sector spending, he said.

"That can’t go on forever. You can’t keep mounting debt indefinitely without repaying it. Nobody can. No government can."

More random thoughts on campaign:

Angus Reid

We can expect a couple of surveys in Manitoba, one at the mid-way point of the campaign and another one on the final days, says AR’s Mario Canseco Vice President, Communications & Media Relations.

Winnipeg’s Probe Research will release its own poll out near the end of the campaign.

Cottage taxes

The Manitoba Association of Cottage Owners Inc. (MACO) hosts a rally Thursday Sept. 15 at the legislative building grounds at 7 p.m.

MACO has lobbied for more than a decade to get the education tax off municipal property tax bill and put on income tax.

MACO says the current form of taxation is unfair to Manitoba cottage owners who pay education tax twice, on their primary residence and on their cottage.

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About Larry Kusch and Bruce Owen

Larry Kusch has been a journalist for 30 years, the last 20 with the Winnipeg Free Press. His is one of the newspaper's two legislative bureau reporters.

Raised on a Saskatchewan farm, he received an honours journalism degree from Carleton University in 1975.

At the Free Press, Larry has also worked as a general assignment reporter, business reporter, copy editor and assistant city editor.

Bruce Owen joined the Winnipeg Free Press in 1990 after four years working in other media.

He's worked in a number of positions at the Freep, including pet columnist, assistant city editor and police reporter. Right now he takes up space at the Manitoba legislature.

Bruce is one of five reporters who won a National Newspaper Award for the paper’s coverage of the 1997 Flood of the Century. He's also the recipient of the 1996 Volunteer Centre of Winnipeg Media Golden Hand Award and the 1995 Canadian Federation of Humane Societies Media Commendation Award.

In a past life Bruce worked at YMCA-YWCA Camp Stephens. He has a blog where he and others write about camp and the people who worked and played there.

You can also find Bruce on Twitter where he posts and retweets all sorts of stuff.

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