Manitoba’s new education tax rebate was touted as way to bring relief to working people, seniors and lower-income families, but a CBC analysis found that owners of Winnipeg’s most expensive properties reaped the most benefit to the tune of millions in rebates.
The Progressive Conservative government’s plan to reform school financing put a 25 per cent education tax rebate cheque into every homeowner’s pocket last year, but the dollar amounts of those cheques for single dwellings and condominiums varied widely — from $8 for a tiny condo in Winnipeg’s St. John’s neighbourhood to $6,023 for a Tuxedo property — according to data obtained through access to information.
“Every dollar that is going to someone who owns a gigantic high-valued house is a dollar that we don’t have to improve our health-care system, to improve our schools, and help our economy here in Manitoba grow in an equitable way,” said University of Manitoba economist Jesse Hajer.
The stated goal of the education tax rebate program, which cost nearly $250 million when the province was in deficit, was to put money “back into the hands of the people who work so hard to get money in the first place, seniors living on fixed incomes … families struggling to make ends meet, small businesses, as well, that were victimized with more red tape and higher taxes,” according to former premier Brian Pallister, who unveiled the plan on April 1, 2021, after making it a campaign promise.
“It’s a fabrication to maintain that as putting more money into the pockets of Manitobans,” said University of Manitoba economist Gregory Mason.
A CBC analysis of Winnipeg properties shows the top 10 per cent of education tax rebate recipients pocketed four times more cash than the bottom 10 per cent.
The top tier was rebated $17,750,239, which represents 18.5 per cent of total for homes and condos. The bottom tier got $4,310,223 or 4.5 per cent of the total.
Homeowners are not the only ones who got a rebate cheque. Commercial properties received a 10 per cent rebate last year and will get the same percentage this year.
Polo Park shopping centre received the largest cheque overall, totalling more than $1 million.
Other well-known Winnipeg buildings topped the list, including the three skyscrapers at Portage and Main.
This analysis is limited to Winnipeg properties and does not reflect rebates provincewide.
Hajer says he is not surprised owners of higher-priced properties got a larger chunk of the cash the government borrowed for the rebates.
“It’s completely consistent with the way that tax cuts work. Those at the top are going to get a larger share than those in the middle and at the bottom,” said Hajer.
Hajer says some people are doing very well right now and do not need the extra money, while others are struggling to feed their families.
The top rebate cheque recipient, who got slightly over $6,000 for a 9,860-square-foot Tuxedo home, declined an interview.
Olivia Klaric lives in a 672-square-foot home in Point Douglas on a street where most of the houses fall into the bottom 10 per cent of tax rebates.
“Most low-income people realize that they’re always going to the shaft from the government,” Klaric said
“Fairness went out the door on this little project of theirs.”
She questions the wisdom of offering the rebates when the province needed to borrow the money to do it.
“It doesn’t make sense when some people … got $1,000 or up. And I know I got, I think, a hundred.” said Klaric, who got $111.56 to be exact.
Sheila Engel lives a few doors down from Klaric and received a $228 cheque. She’s happy to pay taxes because she appreciates the services the government provides.
“I wouldn’t expect them to give back more tax dollars to people that didn’t pay the same equivalent taxes,” said Engel.
The average rebate for a Winnipeg homeowner was about $458 in 2021.
The next round of rebate cheques will be higher since the Stefanson government announced it has bumped the rebate up from 25 per cent to 37.5 per cent and 50 per cent will be rebated in 2023. There are no caps on the amount that is rebated.
The education property tax rebate is based on the gross school division taxes owing for each property owner, and is calculated before the education property tax credit is applied
Before the education property tax rebate was introduced in 2021, there were tax breaks for seniors and farmers which remain to this day. In 2021, the seniors education property tax credit was capped at $300 with income-based clawbacks and the farmland school tax rebate had a cap of $3,750.
Some do not need the money
Hajer, who also writes for the Canadian Centre for Policy Alternatives, says even though everyone got the same 25 per cent rebate, it can result in unequal outcomes.
“There are some people who are doing very well right now, who do not need the extra money from any objective criteria. And there are those who are struggling, who were more severely impacted by the pandemic,” said Hajer.
He said those with lower incomes are more likely to spend the tax rebate, which stimulates the local economy. When taxes are cut for the wealthy, they generally end up sitting on that money, said Hajer.
Tax cuts less transparent
Hajer says tax cuts are less transparent than benefit programs because it obscures the fact that wealthier households are getting much more cash than those in the middle and lower classes.
He says with benefit programs, it’s usually very clear the amount a person qualifies for and the maximum amount is public.
University of Calgary economist Jack Mintz, who has been published in the Fraser Institute, says because very low-income earners may pay a bigger portion of their income to taxes than the very wealthy, the rebate actually might give them more relief in terms of disposable income.
But Mintz says if you really want to improve the economy, it’s better to cut the land transfer tax or reduce personal income taxes than to cut the property tax.
“There are some taxes that have a very negative impact on growth, such as corporate income taxes, land transfer taxes and personal taxes,” said Mintz.
He says cutting property taxes is a lesser priority but he admits that he is looking at it “strictly from an economic point of view rather than looking at it from a political point of view.”
Like a shell game: Mason
University of Manitoba economist Gregory Mason characterizes the rebate cheques as a way to make the electorate feel good.
“That’s really what the government is buying with the money is that little bit of gratitude on the part of people,” said Mason.
He agrees with the government’s goal of funding education out of general revenue instead of property taxes.
The rebates are part of a multi-year plan to transfer education funding away from property taxes to general revenue.
“I really wouldn’t get too kind of concerned about the fact that some people got a big cheque back because they paid a big amount of money,” said Mason.
He says things are getting cut or there’s less revenue in other parts of the system.
“It’s a shell game. They’re moving money around and there’s less money left over to do something else.”
Mason is concerned taxation in Canada is far too complicated and any attempts to limit the rebate for wealthy homeowners, or increase the rebate for less valuable homes adds complexity to an unnecessarily complex system.
As for borrowing money to cover the rebates, Hajer says government needs to think about whether paying interest is worth it. He says borrowing money for education and health-care has high economic payoffs.
“Is it worth borrowing money so that we can give money away to those who aren’t struggling, to those who are already doing quite well? I would suggest that’s a very poor use of money,” said Hajer.
Back in Point Douglas Olivia Klaric has a similar take on borrowing money to give out rebates.
“I think they could have put a stop to it, but they didn’t because they were trying to keep a promise that wasn’t a very good promise to the people of Winnipeg or to the people in Manitoba.”
Finance Minister Cameron Friesen was not available for an interview but did send a written statement that did not respond to the CBC analysis of the rebates.
“Affordability is a major priority of our government,” wrote the minister. “Our education property tax rebates in Budget 2022 are helping make life more affordable for Manitobans.”
Friesen also would not say how the funds spent on rebates will be replaced in the province’s coffers, but he did say that rebates will be funded under general revenue, not through additional borrowing.