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Don't lift school taxes from elderly

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Finance Minister Jennifer Howard has checked the piggy bank and found there is not enough money to fund the first year of a phased-in education tax credit for aging Manitobans. Ms. Howard now plans to roll out the credit over three years, not two, to free up $10 million for other education priorities this year. The minister should check her facts and the rationale for this tax credit.

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In fact, there is no money, at all, in the treasury for expensive new initiatives. Every penny the government allots to the new tax credit -- worth $50 million fully rolled out -- comes from borrowing. This is deficit funding of an election promise, the very basis of which is specious.

The idea that people who reach the age of 65 should see the cost of public education lifted from their shoulders is wrong. Aging Manitobans share interest and responsibility for well-financed, quality schools. The philosophical underpinning of a public education system is that the province, as a whole, benefits from an educated population economically, socially and culturally.

The economics go beyond the fact Manitobans pay taxes when they leave school and enter the labour force.

Those who stay in school and graduate from Grade 12 are less likely to be involved in crime, addictions and enjoy higher health status. The education attainment of mothers is a strong indicator of their children's likelihood to succeed in life. Education has the ability to break the cycle of poverty, and that spreads benefits throughout a community's social and economic facets.

Indeed, Ms. Howard herself touched upon the gross inequity of peppering tax benefits by age, rather according to a household's means, in this proposal. Some older Manitobans and retirees have far more disposable income than many working families. Why, the minister asks, would the government be writing a $10,000 or $20,000 cheque to cover the education property taxes levied by school boards on a home valued at $1 million or more? Does it seem fair to transfer this burden from the wealthy onto other taxpayers? But Manitobans might ask why the minister chose $10,000 as her threshold.

Tax credits and exemptions ought to be geared to income, to preserve the progressive nature of the tax regime. But the NDP has undermined that principle, with credits bestowed deliberately to elicit the gratitude of voters. The incautious application of the current universal $700 education tax credit already triggers rebates for some renters and property owners.

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The new age-based tax credit is simply more of the NDP's manipulation of the tax regime to curry favour with the electorate. As with its decision to freeze post-secondary tuition for a decade, the proposed education tax credit hits the sweet spot for a large and growing chunk of voters: There are some 180,000 Manitobans in the 65-plus cohort; for many, eliminating the education levy will cut their property tax bill in half.

Ms. Howard tied the decision to stretch out the implementation of the tax credit to Statistics Canada's new population estimates, which will cut the per capita federal transfers to Manitoba. The truth is Manitoba's financial straits were caused by the NDP's spendthrift management. Indeed, part of the cash Ms. Howard wants to use on other priorities will go to funding smaller classes in the early grades, despite scant evidence backing the move.

The NDP administration does not have a revenue problem; it has an affinity for spending and little respect for budgets -- proven by its record of repeatedly blowing past its spending plans.

Ms. Howard should exercise real restraint and pare back all spending to programs that are strictly necessary, while Manitoba gets back to black. And she should scrap outright the dubious idea of awarding tax credits to Manitobans who have reached their 65th birthday.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien, Shannon Sampert, and Paul Samyn.

Republished from the Winnipeg Free Press print edition February 11, 2014 A6

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