Tories herald personal income tax cuts, increase in health spending in election-year budget By: Danielle Da Silva Posted: 3:07 PM CST Tuesday, Mar. 7, 2023 Last Modified: 6:52 PM CST Tuesday, Mar. 7, 2023 Updates

The Progressive Conservative government is slashing personal income taxes by $311 million and ramping up spending across provincial departments in its final budget ahead of the looming election.

Premier Heather Stefanson’s spending plan for the last year of her mandate proposes significant cuts to income taxes — estimated to save the average two-income family more than a $1,000 on their 2023 tax return — while driving down the deficit to $363 million.

“We are providing historic help in this budget. At the same time, our economic recovery has been stronger than anyone could have imagined,” Stefanson said during a media briefing ahead of the budget speech Tuesday afternoon. “Manitoba is open for business like never before and that is fuelling unprecedented revenue growth this year.

“Budget 2023 invests every cent of that new revenue in the priorities of Manitobans.”

The Tories’ financial blueprint for the fiscal year beginning April 1 includes $21.8 billion in total spending, an increase of $1.97 billion over the 2022-23 budget.

The government is also budgeting $21.5 billion in revenue, an increase of $2.1 billion from last year, driven by income and corporate tax revenue increases and revenue from Manitoba Hydro.

Manitoba will also receive $5.9 billion in transfers from the federal government in the coming fiscal year, an increase of 14.2 per cent.

Proposed tax cuts include raising the basic personal amount to $15,000 from $10,145 in 2023, resulting in an estimated 47,400 people removed from the tax rolls; increasing personal income tax brackets by seven per cent in 2023, followed by 28 and 26 per cent increase to the province’s bottom two tax thresholds, respectively, in 2024; and increasing the payroll tax exemption threshold to $2.25 million from $2 million, effective Jan. 1, 2024.

The proposed cuts will cost the provincial treasury $357 million.

“We are making historic, and the single-largest, change to the basic personal exemption that we have seen in Manitoba’s history,” Finance Minister Cliff Cullen said. “No one will be paying tax until you make $15,000.

“This is moving us from almost dead-last to fourth in the country.”

The province will also follow through on its promise to rebate half the education property tax it collects on residential and farm properties in 2023, costing the government $453.2 million.

What people are saying about Manitoba Budget 2023

Posted: 5:50 PM CST Tuesday, Mar. 7, 2023

“I’m having a hard time patting them on the back for finally putting the funding into health care that they have consistency and deliberately denied over their term, and it’s a shame it took until the end of their second mandate to do that.”

— Darlene Jackson,Manitoba Nurses Union

“For so long in Manitoba, we have not been competitive. All the other jurisdictions have been making adjustments, whether it’s on personal income tax rates, whether it’s on payroll taxes… Today was a big step, and it was a bold step for Manitoba to take to get us back in that game.”

— Chuck Davidson,Manitoba Chambers of Commerce

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Opposition leaders said the Tories appear to have abandoned the idea of fiscal responsibility in an election year.

“They’re running a $300-million deficit and they’re giving away hundreds and hundreds of millions of dollars in unfunded tax cuts,” Liberal Leader Dougald Lamont said Tuesday. “These are not paid for through a surplus.

“We are borrowing money in order to make changes both to income tax and property taxes, which in both cases will overwhelmingly benefit people at the top of the income scale.”

New Democratic Party Leader Wab Kinew accused the Stefanson government of playing politics with promised affordability measures. Significant cuts to income taxes proposed for 2024 will not come into effect until after the 2023 election, scheduled on or before Oct. 3.

“Manitobans, on affordability, need help right now. Manitobans need help with those monthly utility costs and other bills that just keep piling up,” Kinew said, stating the PC government should not be trusted to follow through on spending promises after seven years of austerity.

“They’re making these announcements, but which version of the PCs do you think you’re going to get if they get a chance to govern again after the election?”

Asked whether the NDP, which has been outpacing the PCs in opinion polls, would reverse the tax changes should the party form government, Kinew said a fully costed platform and fiscal plan would be released closer to the election date.

Government spending is increasing by an average of 12 per cent across all 19 departments, including an eight per cent increase to health care. Proposed increases to spending on seniors, long-term care, mental health, and addictions raises total health-related expenses by 9.2 per cent.

The Tories have budgeted a total of $7.9 billion for health, an increase of $668 million from the past year. A proposed multi-year, $1.2-billion capital plan for health care is also budgeted.

A total of $3 billion in capital spending is planned for 2023-24, with $854 million going to roads, highways and flood protection.

Manitoba economic growth is forecast to slow considerably this year and next, compared to 2022. The budget forecasts the province’s real gross domestic product will slow from 3.6 per cent growth in 2022, reaching 0.7 per cent in 2023 and 1.1 per cent in 2024.

Canadian Centre for Policy Alternatives (Manitoba) senior researcher Niall Harney said the PCs — or any other future Manitoba government — will be challenged to maintain the departmental spending proposed in the budget as it slashes its own-source revenues.

“They’re limiting their capacity to raise revenue in future years, relying on these good times right now, these high federal transfers, high income taxes from inflation, and a good year from Manitoba Hydro,” said Harney. “It’s creating a hole for future years of revenue.

“We have huge issues in our province around health, education, dealing with social inequalities, dealing with child poverty,” Harney said. “This is hugely fiscally irresponsible.”

The budget forecasts the provincial government’s debt to grow by $3.2 billion, with debt servicing to cost $1.3 billion in the 2023-24 fiscal year. The budget also forecasts the Manitoba government achieving a $53-million deficit by 2026-27.

Despite criticisms, Stefanson said the budget signals a return to Tory roots: “progressive on social issues and conservative on fiscal issues.”

“This budget is reflective of what Manitobans have been telling us for some time now,” she said, describing it as a balance between demand for improved government services and tax relief. “They don’t want things to get off the rails, they want to ensure that we’re continuing to reduce the deficit.”

Manitoba Budget 2023

danielle.dasilva@freepress.mb.ca

Danielle Da Silva
Reporter

Danielle Da Silva is a general assignment reporter.

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