My office has fielded quite a few questions about the plan to eliminate the education property tax.

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This article was published 22/6/2021 (209 days ago), so information in it may no longer be current.

My office has fielded quite a few questions about the plan to eliminate the education property tax.

Most homeowners should have received cheques in the mail by now for about 25 per cent of their gross education property taxes. That’s a good thing. Next year, homeowners should get cheques for twice that much again.

But what about renters? And why did property taxes go up slightly in the process?  And how will our education system be paid for anyway?

The budget for K-12 education in Manitoba is set independently of this tax. In fact, we spend three to four times as much on K-12 Education than this tax provides. It is paid for mostly by income tax and sales tax. Economic growth and population growth means that government is collecting more money in income tax and sales tax, even after lowering the PST. K-12 education funding this year is set at more than $3 billion for the first time  and it will only increase from there, continuing to be funded primarily by income tax and sales tax.

It is important to understand that the education property tax and its associated rebate were complex, even before we started eliminating it.

The tax rates were set by 38 school boards, collected by 137 municipalities, and then paid to the province.  The $700 tax credit (now $525) is also complicated. While most people both pay the tax and receive the rebate simultaneously on their property tax bills, many others either only pay the tax (such as landlords and people who own more than one property) or only receive the rebate (such as tenants), provided they file their income tax returns correctly. There is also a special rebate that eliminates the tax for lower-income seniors.  

These complexities have led to some strange outcomes. For example, landlords will often pay far less in education property taxes than their tenants correspondingly receive in rebates. In that case, those tenants are in effect taking money from neighbouring households rather than actually paying any taxes. I am sure you’ll agree, that doesn’t make a lot of sense.

It should not be surprising that eliminating this complex tax is also somewhat complicated.

The education portion of your property tax bill may have gone up slightly this year - by about $15/month. This should be more than offset by the rebate cheque you received. Because the rebate cheque was for 25 per cent of your gross education property taxes, the effect is that your net education property tax bill should decrease by 25 per cent this year and 50 per cent next year.

Tenants who don’t pay the education property tax but still receive the rebate might notice that their annual income tax refunds are up to $175 lower than in previous years. To make up for that, government has mandated a rent-freeze for the next two years. For most renters, the benefit of a rent freeze compared to 1.6 per cent annual increases in rent will more than outweigh the loss of the property tax credit. This is a plan that benefits nearly all Manitobans.

Hopefully, all this answers your questions and helps set the record straight.

If you have more questions or concerns, please contact my office at 204-691-7976 or by email at office@jamesteitsma.ca

James Teitsma

James Teitsma
Radisson constituency report

James Teitsma is the PC MLA for Radisson.