Homeowner angry about tax credit change

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This article was published 28/09/2019 (2173 days ago), so information in it may no longer be current.

An Erickson woman is fed up after changes to the education property tax credit nearly tripled her property tax bill this year.

Mary Hutchings, who works as a librarian in Erickson, said she opened her property tax bill this year to find she owed approximately $775 — a massive jump from the $250 she paid in past years and for which she had budgeted.

“I’m living on pensions and a small part-time job; it’s just difficult to make that stretch,” she said.

“The house is paid for — it’s been paid for for a long time — but I’m starting to worry about where this has got to come from next year and the year after that and the year after that.”

The jump is the result of changes to how the province assesses the education property tax credit. The $700 tax credit is automatically applied to property tax bills and is meant to cover school taxes. Prior to 2019, the full value could be accessed if both school and municipal taxes added up to more than $700. Starting this year, however, only school taxes can be applied toward the credit.

Hutchings’ house is worth slightly more than $40,000, which means she does not pay enough school taxes to use the full amount of the tax credit. In past years, the credit covered the majority of her bill.

For people living in rural areas — where properties are typically valued lower than in urban areas — that change has become a big problem. Lower-valued homes pay less in school taxes, meaning residents likely don’t reach the threshold to get the full value of the tax credit.

Hutchings said she is lucky because she is a retired teacher, so she has a pension and the skills to find a part-time job. Many seniors are not in the same position, so could be dealing with a more significant burden.

“I was really angry; really angry at the injustice of it, and when you see corporations getting away with paying little to nothing and (the provincial government) is nickel and diming us — the people who live in the humblest of circumstances, it’s really discouraging,” she said.

Going forward, Hutchings said she will have to find areas to cut so she can afford her property tax bill. She would also like to see a public meeting in the area so the provincial government can explain the reasoning behind the change.

“I’ll just have to move it over from — I don’t know, taking my grandkids to swimming in Brandon? What do you do? It has to come from somewhere, so I guess it’s going to have to come out of my monthly budget somewhere,” she said.

Victor Baraniuk, reeve of the Municipality of Clanwilliam-Erickson, where Hutchings lives, said he has heard the same concern from other residents. He estimated that approximately 25 per cent of properties in the municipality were affected by the change.

“I think it needs to be re-examined and try to find a little bit of a fairer way to apply it rather than the way it has been done … definitely, everybody has got to pay for this in some way or another — I don’t think it should be just unloaded on certain people,” he said.

A spokesperson for Manitoba Finance said municipalities were told about the change last winter, before the change was made in the most recent provincial budget. The change is meant to be revenue neutral and the tax credit was originally meant to offset school taxes, not municipal taxes.

“The government’s focus on balancing the budget will continue to free up dollars no longer allocated to debt servicing for continued investment in areas like health care, education and infrastructure, but also even greater tax relief to make life more affordable for Manitobans,” an emailed statement reads.

Association of Manitoba Municipalities president Ralph Groening said the organization was not consulted before the provincial government made the change to how the tax credit is assessed. It was a surprise to the AMM, as well, when the change was made.

He said the association would like to see the change reversed and will continue to lobby the new term of the Progressive Conservative government on the issue.

“We have sent letters of concern to the minister in charge, and we’ve received a response indicating that they were not willing to consider our request,” Groening said.

Changes to the tax credit had an especially big impact on the Municipality of Rossburn. Mayor Kerry Lawless said 89.5 per cent of the households who received the tax credit were affected. On average, it added $280 to property tax bills in the municipality.

“We have a lot of pensioners in our community, and it’s a pretty significant hit,” he said.

During the most recent provincial election campaign, the Progressive Conservative party campaigned on a promise to gradually phase out education property taxes over the next decade. The spokesperson for the province said this won’t start until 2020, when the budget is anticipated to be balanced.

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