June 23, 2018

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Tax breaks to frame today's budget

BORIS MINKEVICH / WINNIPEG FREE PRESS FILES</p><p>Finance Minister Cameron Friesen's budget is expected to indicate how much progress the government intends to make in deficit reduction in each of the next several years.</p>

BORIS MINKEVICH / WINNIPEG FREE PRESS FILES

Finance Minister Cameron Friesen's budget is expected to indicate how much progress the government intends to make in deficit reduction in each of the next several years.

Finance Minister Cameron Friesen's third budget will provide a tax break to small businesses in addition to individual taxpayers, the Free Press has learned.

The Progressive Conservative government plans to boost the income threshold at which businesses pay tax to $500,000 from the current $450,000.

The move is expected to save some businesses up to $6,000 annually. Total annual savings to Manitoba businesses from this measure are expected to reach $7 million.

Premier Brian Pallister has already signalled that today's budget will provide some income tax relief for individuals in the form of an increase in the basic personal exemption.

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Finance Minister Cameron Friesen's third budget will provide a tax break to small businesses in addition to individual taxpayers, the Free Press has learned.

The Progressive Conservative government plans to boost the income threshold at which businesses pay tax to $500,000 from the current $450,000.

The move is expected to save some businesses up to $6,000 annually. Total annual savings to Manitoba businesses from this measure are expected to reach $7 million.

Premier Brian Pallister has already signalled that today's budget will provide some income tax relief for individuals in the form of an increase in the basic personal exemption.

The government has also telegraphed that it will continue to lower ambulance fees.

In addition to the modest tax breaks, there will be keen interest in today's budget in two key areas — progress in reducing a massive provincial operating deficit and word on how when and how the government will implement a federally mandated tax on carbon.

Pallister has said the government will announce today the date in which the new tax will come into effect. Manitoba has opted to institute a higher initial tax — $25 per tonne — than the federal government is demanding, but pledges not to increase it after that, arguing its plan will be more effective in combating greenhouse gases than Ottawa's multi-staged proposal.

The Manitoba tax would raise the price of gasoline, for instance, by about a nickel a litre. It's expected to add $260 million a year to provincial coffers.

Today's budget is also expected to contain details of how the government expects to protect certain groups from the negative effects of the tax, be they farmers or homeowners on fixed incomes facing higher heating costs.

Farmers are worried they will become uncompetitive if they are forced to bear the full brunt of the carbon tax. They've been told they can expect a break on tractor and combine fuel, but they fear the same consideration will not be extended to barn-heating fuel.

Local manufacturers are also worried the carbon tax will hurt their competitiveness when they sell products into the U.S. and certain offshore markets. The Business Council of Manitoba has lobbied Friesen to exempt manufacturers from carbon taxes paid on producing products for export.

Pallister has speculated that a portion of the revenue from the carbon tax may be used to subsidize an anticipated significant rise in hydro fees — at least for low-income Manitobans.

Environmentalists have called on the government to spend all carbon tax revenues on projects that will reduce Manitoba's carbon footprint. Ideas on how the revenues ought to be spent range from operating more electric buses, subsidizing purchases of electric cars, and adding more bicycle lanes to wetlands development and switching homes and businesses to geothermal and solar energy.

Manitobans are expected to have a good idea what the PC government's priorities are in this regard once the budget is introduced this afternoon.

When asked Friday what the government planned to do with carbon tax revenue, Pallister would only say is that "it's going back to Manitobans."

Since they were elected in April 2016, the Tories have been trying to chip away at the province's massive operating deficit. In December, Friesen revised the estimated deficit for the current budget year down to $827 million from the $840 million he originally forecast last spring. The government has hinted the final number may be even lower.

Friesen's budget is expected to indicate how much progress the government intends to make in deficit reduction in each of the next several years. The PCs have promised to balance the province's books by the end of a second term in office. Complicating matters is the fact they also plan to reduce the provincial sales tax by a percentage point by 2020. That would remove $300 million in annual revenue.

Friesen lowered expectations last week about any kind of government revenue windfall from the legalization of recreational cannabis. He indicated today's budget may not even contain an estimate for revenues from pot.

Meanwhile, Education Minister Ian Wishart has hinted the budget will contain news about increasing public school capacity.

The government has been awaiting a report analysing whether there is a business case to be made for constructing four new schools through public-private partnerships, which could lead to extensive use of P3s for capital projects. Asked last week if the budget will include the results of the P3 study, Wishart grinned and said, "Wait for Monday."

larry.kusch@freepress.mb.ca

nick.martin@freepress.mb.ca

 

Larry Kusch

Larry Kusch
Legislature Reporter

Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.

Read full biography

Nick Martin

Nick Martin
Education Reporter

Nick Martin is the bearded guy we keep hidden away at the back of the newsroom. He is now in his fourth decade working in daily newspapers.

Read full biography

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