Balance Manitoba’s books

Hey there, time traveller!
This article was published 28/03/2024 (582 days ago), so information in it may no longer be current.

In Manitoba, 22 cents of every dollar sent to the government by taxpayers is used to pay interest charges on provincial debt.

In total, interest charges will cost taxpayers $2.2 billion this year. That’s $2.2 billion that can’t be used for targeted government spending priorities or tax relief. Plus, the currently projected $1.6-billion deficit will only add fuel to the interest charge fire if the government doesn’t get spending under control.

That’s a big problem for a government that has made a lot of new commitments on spending. The NDP platform during the last election highlighted more than $500 million in new spending for each of the next four years. That doesn’t even count the additional $710 million in spending recently announced for the rest of this year.

To deal with the deficit, the government needs to take a hard look at the expenditure column. Last year, the government spent more than $9.2 billion paying government employees. That’s equivalent to about 87 per cent of what the government collects in taxes. On average, government employees make about 5.5 per cent more per year than everyone else. Reducing government compensation costs by 5.5 per cent would save taxpayers about $507 million.

The government also spends about $482 million per year on corporate welfare, despite economic research finding no significant evidence of subsidies helping to increase economic growth. Ending this useless practice would free up that $482 million to push down the deficit.

Then there’s the spending spree. Since 2018, government revenues have increased 27 per cent, but spending has increased 35 per cent. That’s unsustainable.

If the government had only increased spending by combined population and inflation growth since then, it would be spending $1.4 billion less this year.

With these reductions, the government will find itself about $2.4 billion in savings and be able to dig itself out of this deficit hole and keep the gas tax cut around for good. Future budget surpluses can then be used to pay down the government debt and stop wasting $2.2 billion per year on nothing.

Some argue the government should cancel the gas tax cut because of the looming deficit and its $342 million annual price tag. That’s the wrong call, and a very unpopular one. According to a poll conducted by Leger, 77 per cent of Manitobans want the government to extend the 14 cents per litre gas tax cut it implemented on Jan. 1.

Plus, raising taxes isn’t the guaranteed solution it seems to be. In fact, it could likely make the whole situation worse. It’s foolhardy to expect Manitobans to just sit down and accept even higher taxes when they could just pack up the mini-van and move to Regina or Calgary.

The average Manitoba family making $75,000 a year pays more in provincial taxes than similar families in Western Canada. They pay $4,322 more than the same family in Alberta and $2,802 more than in Saskatchewan. Tax hikes cannot be on the table.

The Manitoba government will soon unveil its 2024 budget. It’s the first budget for Premier Wab Kinew and Finance Minister Adrien Sala.

In the budget they will be forced to put in black and white how they plan to tax and spend throughout the next year. Budget day will still have its fair share of comms-shopped statements, but the numbers on the pages of the budget documents will show the true story.

The government has spent a lot of time blaming the previous Tory government for current budget woes, but to be frank — that doesn’t matter.

It’s completely up to Kinew and his team to present a budget that helps taxpayers and doesn’t drive the $33-billion provincial debt up even higher.

This new government has spoken a lot about its commitment to fiscal responsibility. The April 2 budget is the time for it to put its money where its mouth is and give Manitobans a balanced budget.

Gage Haubrich is Prairies director of the Canadian Taxpayers Federation.