Manitobans can look forward to income-tax break in provincial budget, Pallister says

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This article was published 26/02/2018 (3101 days ago), so information in it may no longer be current.

Premier Brian Pallister says the government plans to give Manitobans a break on their income tax in next month’s budget to offset rising interest rate and utility-fee hikes.

Pallister told Bloomberg news Manitobans are among the most heavily taxed in the country and “there is absolutely” room in the March 12 budget to reduce that burden.

He did not indicate how big a tax cut was in the offing. In the 2017 budget, the government announced it would raise both the basic personal income tax exemption and tax brackets in line with inflation.

Pallister told Bloomberg there’s a “triple threat” of higher federal small business taxes, rising interest rates and pending Manitoba Hydro rate hikes that are putting the squeeze on citizens. The province needs to ensure taxes are “going in the right direction,” he said.

He said the tax relief could come in the form of raising personal-exemption rates, citing a significant gap in these rates between Manitoba and its provincial neighbours.

The basic personal exemption for income tax in Manitoba (2017) is $9,271, compared with $10,171 in Ontario and $16,065 in Saskatchewan. It means that workers in these neighbouring provinces can earn more money than Manitobans before they have to pay income tax.

Manitoba’s Public Utilities Board is considering Manitoba Hydro’s request for a 7.9 per cent rate hike. Hydro says it will need additional increases of the same magnitude in subsequent years to improve its debt-equity ratio following years of expensive capital projects. The PUB could rule on Hydro’s request within the next month.

It’s unknown how much wiggle room the Progressive Conservative government has to lower income tax rates, given its past promises.

Manitoba is projected to run a summary deficit of $827 million in 2017-2018, according to a December projection by the Finance Department. That’s $13 million less than Finance Minister Cameron Friesen projected in last April’s budget.

By fiscal year end, the deficit will be even lower, Pallister told Bloomberg.

Pallister has promised to eliminate the deficit by the end of a second term in office. At the same time, he has promised to lower the provincial retail sales tax by a percentage point by 2020. The tax break would cost about $300 million a year.

Still unknown are the effects on the provincial bottom line on the pending introduction of a new carbon tax or revenues from legalized cannabis.

Kevin Rebeck, president of the Manitoba Federation of Labour, said if the Progressive Conservative government is ahead of schedule in its bid to balance the province’s books, it should stop “the dramatic cuts” it is making to public services.

“If he’s doing that in the name of getting our financial house in order and he’s ahead of schedule, then maybe he can ease up on all of these cuts,” Rebeck said.

Loren Remillard, president of the Winnipeg Chamber of Commerce, said the government’s top priority ought to be to bring the province’s books into balance, but he didn’t fault Pallister for also eyeing tax reduction.

“Any time you can reduce the amount of money that Manitobans are having to pay in tax, that’s going to benefit the economy. The more disposable income that Manitobans have, the more economic activity we will see in Manitoba from that,” he said.

NDP Leader Wab Kinew said any gains from an income tax cut will be undermined by rising Hydro rates and higher municipal and school taxes that are “being forced onto Manitobans” as a result of provincial cuts.

“This government will be giving with one hand and taking with the other,” he said.

Liberal Leader Dougald Lamont said if Pallister is proposing once again to increase the basic personal exemption he will be again handing “a tax cut to the richest Manitobans, including himself” while adding to the provincial deficit.

“Last year, the CCPA (Canadian Centre for Policy Alternatives) said that someone with an income of $14,000 would save $14, while a household making $200,000 would save $500” from the PC government’s income tax changes, Lamont said.

larry.kusch@freepress.mb.ca