Tax cuts may not add up to support for Stefanson

New budget. New premier. Same old fiscal madness.

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Opinion

New budget. New premier. Same old fiscal madness.

Faced with a crisis in health care and plummeting support, Premier Heather Stefanson needed to deliver a budget that repaired the damage done by her predecessor Brian Pallister, while breathing new life into the Progressive Conservative brand.

Instead, Stefanson drew up a budget that Pallister would be proud of.

Despite all of the rhetoric in the budget documents about “rebuilding” and “restoring” the economy and government services, Stefanson’s 2022-23 budget plan remains stubbornly committed to starving core services in favour of lavish tax cuts.

Manitoba Premier Heather Stefanson speaks to media following the delivery of the 2022 budget in Winnipeg on Tuesday at the Manitoba Legislative Building. (David Lipnowski / The Canadian Press)

Stefanson decided to continue Pallister’s pledge to eliminate the education portion of property taxes. Last year, in what turned out to be his last budget as first minister, Pallister cut the education levy by 25 per cent — and promised to deliver another 25 per cent cut in the current fiscal year.

It was arguably the single biggest tax cut in Manitoba history, a tax expenditure that drained a quarter of a billion dollars of revenue from a government treasury that was already struggling under the biggest deficit ever recorded in this province. Pallister was soundly criticized for the move, which came just months before forces within his own party pushed him out of office.

For a brief moment, there was a sense in the Tory ranks that Stefanson would bring a measure of fiscal sanity to the government and breathe new life into the Progressive Conservative brand. For any Tory who thought that, Tuesday’s budget had to be a sorry disappointment.

Stefanson did slow the pace of the elimination of the education levy, promising a 12.5 per cent cut this year and next. By the time that pledge is fulfilled, the education levy will be reduced by half, and government will have forgone $453 million of revenue each and every year.

For a brief moment, there was a sense in the Tory ranks that Stefanson would bring a measure of fiscal sanity to the government and breathe new life into the Progressive Conservative brand. For any Tory who thought that, Tuesday’s budget had to be a sorry disappointment.

If tax relief were the No. 1 issue for Manitobans right now, you could applaud Stefanson’s decision to continue cutting hundreds of millions of dollars from own-source revenues, even as the budget remains deep in deficit and the provincial debt continues to swell.

But as most people know, tax relief isn’t really what Manitobans want right now.

Along with the lingering COVID-19 pandemic, health care and the tens of thousands of backlogged surgeries and diagnostic services are the top concerns right now. And how did the Stefanson government respond to those concerns?

Finance Minister Cameron Friesen announced Tuesday that an additional $110 million in what appears to be one-time money will be available to help with health-care backlogs, and about $90 million more in baseline health funding. It sounds like a lot of money until you realize that the Tories are spending twice that much to cut education property taxes.

Finance Minister Cameron Friesen (Mike Deal / Winnipeg Free Press)

Friesen noted that his government heard from more than 50,000 Manitobans in pre-budget consultations. One has to wonder how many of those Manitobans told the government to cut taxes first — and fix health care second.

And that is just one tax cut. It should be noted that since coming to power in 2016, the Progressive Conservative government will have committed more than $1 billion to annual tax expenditures.

In the current budget year, the Tories have spent $161 million indexing the basic personal income tax exemption, and $360 million with a decision to cut the provincial sales tax by one point. The Tories also gave away $52 million in PST exemptions for things like will preparation, life and house insurance, and a range of personal services.

Add that to the $453 million in education property taxes and, come the next provincial election in 2023, the Tories will have bestowed more than $1.2 billion in tax cuts on an annual basis. That means $1.2 billion less dollars for health care, education and other government services this year, next year and likely forever.

As most people know, tax relief isn’t really what Manitobans want right now.

It’s worth noting that it took some spade work with officials from the finance department to obtain a total for all of the tax expenditures. Why would a government so clearly committed to lowering taxes try to obscure its tax cuts?

The PCs know full well that many Manitobans have come to view tax cuts as a mixed blessing.

For many die-hard Tories, the billion-dollar annual tax cut will be viewed as an unqualified victory. However, many other voters will know that tax cuts translate into spending cuts that result in the erosion of core services.

For anyone who works in the public sector, and for all those who are waiting for health-care services, aggressive tax cuts without any effort to restore services will be a very unpopular fiscal strategy. One that will not service the Tories well when they face voters in 2023.

Through painful personal experience, Manitobans know that you cannot cut taxes that much without eroding public services. And despite the claims within the Stefanson government that they are rebuilding and restoring services, expenditures in this year’s budget, even in priority areas like health care, are well below the rate of inflation.

Pallister ruined the PC brand by plowing ahead with a fiscal plan that put tax cuts ahead of shoring up government services. If Stefanson continues following the example set by her predecessor, she may end up becoming a former first minister. Just a couple of years later than Pallister.

dan.lett@winnipegfreepress.com

Dan Lett

Dan Lett
Columnist

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

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