Progressive Conservative leader Brian Pallister caught Manitobans' attention, announcing yesterday -- long in advance of a foreseeable election campaign -- that his party would immediately raise the basic personal income tax exemption by almost $2,000. That would save individual working people $200 each and two-income households more than $400, he said.
It is a welcome sign that Manitoba's opposition has turned its mind to the tax burden on citizens. Mr. Pallister was not committing to index to inflation the threshold at which taxation kicks in, which would rise to $10,617 from $8,634 under a Tory government. That would bring Manitoba in line with the Canadian average.
In fact, Manitoba is also among the last provinces that resist indexing tax rates. Without inflationary increases, taxation chews into the annual pay hikes of Manitobans as they are pushed into higher brackets. Bracket creep, as it is called, has contributed to a discernible disparity between taxes paid by workers here compared with those in Saskatchewan, which also has a dramatically higher personal exemption of $14,942.
The governing New Democrats have resisted demands for indexation to bring the income tax tab here closer to those in Saskatchewan and Alberta. Mr. Pallister, however, said broader tax reform would have to be driven by the party, and discussions on such a position will start in the new year.
In its 13 years in power, the NDP has made incremental changes to personal income tax, despite the massive influx to revenues from federal transfers, which merely fuelled a spending program. Successive years of deficits have had a chilling effect on talk by the Selinger administration of income tax breaks, and in fact triggered tax hikes on services.
This opens opportunity for the Tories. Mr. Pallister is moving with understandable caution. Manitobans will want to know how the party that declared in the 2011 election campaign that Manitoba's deficit would take four years longer, to 2018, to be eliminated will find room for the $130-million cost of raising the basic exemption. Mr. Pallister noted moving Manitoba Hydro's new bipole line to the cheaper route on the east side of the province would over time save an equivalent amount of money, but that would help ratepayers, not provincial operating revenues.
There is ample room on the taxation file for the Tories to distinguish themselves as an alternative to the NDP administration. Manitobans are waiting to hear more.