PCs promise income tax relief for Manitobans in pre-election provincial budget
All working Manitobans will have less of their income taxed — and thousands of the province’s lowest income earners will stop paying income tax entirely — as the Progressive Conservative government continues to loosen the purse strings in the waning months before a scheduled October election.
The Manitoba government’s 2023 budget, released Tuesday, commits to raise the income level at which people start paying tax from the current $10,145 to $15,000.
That amount — the basic personal exemption — normally increases each year based on the rate of inflation, a calculation that would have raised the exemption to $10,855 this year.
On average, a taxpayer will save $448 due to the larger increase, according to the province. The change also means 47,000 more low-income earners will pay no income tax at all, the province says.
The government is also planning to raise all tax brackets starting in 2024, which will also lower the tax burden on working Manitobans.
Finance Minister Cliff Cullen called the budget a marked departure from the austerity-minded approach the Progressive Conservatives are known for.
A $363-million deficit is projected, but the government could have balanced its budget with the money it is instead dedicating to tax relief.
“Unlike the budgets of my predecessors where fiscal responsibility ruled the day, Budget 2023 fully reflects the Progressive Conservative roots of our premier,” Cullen said Tuesday afternoon, in his speech presenting the budget in the legislature.
Premier Heather Stefanson, speaking during an early afternoon briefing, said her government’s budget “puts hundreds of millions of dollars back in the pockets of Manitobans while investing billions more in the services families rely on.”
“It is truly historic help for all Manitobans.”
The $22-billion provincial budget — up almost $2 billion from the previous budget — includes a nearly half-billion-dollar hike in health-care spending, as well as funding increases for all 19 government departments.
In particular, health-care spending is up seven per cent, from $6.7 billion last year to $7.1 billion for the year ending on March 31, 2024.
University of Winnipeg economics professor Philippe Cyrenne said the Progressive Conservatives are trying to win over voters with their budget.
“It looks like an election budget in some ways,” he said, with tax relief “trying to appeal to people who worry about the competitiveness of living and working in Manitoba.”
The province’s competitiveness will likely become a growing issue as jurisdictions across the country increasingly look elsewhere to fill labour shortages, he said.
Changing approach for Tories
Cullen, speaking to reporters during the afternoon briefing, denied any suggestion the Tories are eschewing the fiscal responsibility that has been the party’s hallmark, but said his government is shifting from a rigid focus on the province’s bottom line.
“Contrary to what you hear, we’re not making cuts, we’re increasing budgets,” he said.
The province is taking advantage of a windfall in new money. In comparison to the last year, federal transfers have increased by $1.05 billion, income tax revenues by $574 million and provincial sales taxes by $192 million.
The promised 2024 changes to income tax brackets will see the lowest tax rate of 10.8 per cent, which currently applies to the first $36,842 in taxable income, apply to the first $47,000 starting next year.
By 2024, the highest tax rate (17.4 per cent) will kick in after $100,000 of taxable income, up from the current $79,625.
Raising the basic personal exemption and changing the tax brackets were “by far the most important” recommendations from a working group the province established last year to evaluate ways to make Manitoba’s tax load more comparable with other provinces, Cullen said.
The government is also following through on its pledge to continuing phasing out education property taxes. The rebate for residential and farm properties will increase from 37.5 per cent to 50 per cent, which will amount to a $774 saving for the average homeowner.
As well, 900 businesses will benefit from a scaling back of payroll taxes starting next year.
Attempt to ‘change the channel’: NDP
Gage Haubrich, Prairie director for the Canadian Taxpayers Federation, said while the tax cuts are appreciated, the province shouldn’t wait until 2024 to implement some of them.
The extra money, which could amount to hundreds of dollars per person, would be immensely valuable to Manitobans struggling to make ends meet, he said.
While he wouldn’t commit to the same tax measures if his party wins the next election, Opposition NDP Leader Wab Kinew questioned the government’s sincerity on carrying out the new pledges.
“We all remember the seven years of cuts” since the PCs defeated the NDP to return to power in 2016, Kinew said.
“Now all of a sudden during an election year … the PCs want Manitobans to forget. The PCs would like to change the channel, but I just don’t think people in this province are trusting the PCs anymore.”
He said the NDP, which has been favoured in opinion polls for two years, will reveal its own financial plan closer to the election.
Manitoba Liberal Leader Dougald Lamont slammed the budget as irresponsible, saying the government is “giving away hundreds and hundreds of millions of dollars in unfunded tax cuts” while still running a deficit.
A union representative, meanwhile, said the budget missed an opportunity to devote more resources to recruitment and retention.
“They fallen so far behind, wages haven fallen behind and our members need to catch up and keep up,” Manitoba Government and General Employees’ Union president Kyle Ross said.
Other budget promises
The budget also includes previously announced commitments to spend $100 million more on kindergarten to Grade 12 education, an extra $76 million on child-care and $47 million more in municipal operating funding.
The province also says it will spend $81 million to boost the average wage for disability support workers to $19 per hour, who currently make around $15-$16 per hour, according to a government official.
The government will also spend $120 million to provide more supports for people living with diabetes. The money will extend coverage for insulin pumps for eligible adults with Type 1 and Type 2 diabetes.
There’s also an extra $65 million going toward post-secondary institutions. The province will cap tuition increases at 2.75 per cent.
Other commitments include an extra $50 million for the province’s venture capital fund, which was announced in the 2022 budget, doubling the existing funding.
There’s also $40 million pledged for infrastructure to expand the CentrePort South development.