Anticipating a $1.6-billion deficit this year amid a global pandemic, the Progressive Conservatives are cutting taxes by $200 million, most of which is in the form of a hefty rebate to homeowners and farmers on their education levies.
Owners of residential and farm properties will receive a 25 per cent rebate of the school division special levy and the community revitalization levy payable.
Property owners will receive their rebate cheques at about the same time their municipal taxes are due. They won’t have to apply for the rebate, which will be automatically sent by the province.
The cut will cost the province $190 million this year. The government said it intends to increase the tax rebate to 50 per cent of education property taxes on residential and farm property in 2022.
The government is also exempting the retail sales tax from personal services, such as haircuts, non-medical skin care and spa services, effective Dec. 1.
"We think it’s important to provide direct tax support and relief for Manitobans, particularly during this tough and challenging time economically," Finance Minister Scott Fielding said.
The Sun asked Fielding what benefits for Westman he would highlight from the budget.
"We’ve committed to over a three-year horizon of $500 million a year to fix roads, highways. There’s a variety of capital components that are there. There’s about 100 different roads that will be upgraded in this year’s budget, a large amount of them are in western Manitoba, some of them are in eastern Manitoba, really across the province.
"We’ve also made our commitment for the (Investing in Canada Infrastructure Program) funding, that’s the federal-provincial infrastructure dollars. We want to make sure that money is appropriated this year, gets out and makes a difference this year. We’re committed to spending that money, we want to work with municipalities to get that done and we’re committing our dollars, we want to work with municipalities to get that work done in rural and northern Manitoba.
"We’ve also enhanced what’s called Building Sustainable Communities. There’s, I believe, upwards of millions of dollars more for that. That does smaller projects in local areas, maybe fixing community clubs and other types of initiatives. There’s more money for that for municipalities this year."
Since residential landlords — not renters — will benefit from the 25 per cent rebate, Manitoba will set annual rent-increase guidelines of zero per cent for 2022 and 2023. Landlords will still be able to apply for above-guideline rent increases if they make material improvements to a property.
Owners of other properties, such as commercial, industrial, institutional and designated recreational, will receive a 10 per cent rebate of the total of both the school division special levy and the educational support levy payable.
Fielding said the average homeowner in Brandon would receive a cheque worth $455 this year from the rebate.
The timetable for eliminating education taxes from properties is proceeding far more rapidly than the Progressive Conservatives promised during the 2019 election campaign. At that time, the party promised to begin the phaseout in the last two years of their mandate and to complete it over 10 years.
Asked if the one per cent decrease in the provincial sales tax originally planned for last year was still on the table, Fielding did not answer the question, instead talking about other tax relief measures his government is putting in place.
When Premier Brian Pallister held a media conference call in the afternoon after the budget speech had been read by Fielding in the legislature, he said he would still like to lower the PST, but wasn’t sure when it would be feasible.
Asked whether it was risky for the government to rebate such a large portion of the education property tax at a time of high deficits and economic uncertainty, Pallister shot back: "I think it would be risky not to."
He said the government is moving to "a fairer and more reasonable way" of funding education "without punishing senior citizens for trying to stay in their own home a little longer, or picking on farmers."
Also among this year’s budget highlights is a $22-million addition to the Rent Assist program, which helps low-income residents with accommodation costs and a 10 per cent reduction in vehicle registration fees.
The government is also introducing a new Teaching Expense Tax Credit, which will allow school teachers to claim a 15 per cent refund for up to $1,000 on the cost of eligible supplies that come out of their own pocket.
Meanwhile, the government will start charging the retail sales tax on streaming services such as Netflix, online marketplaces and online accommodation platforms on Dec. 1. Over the course of a full year, it expects to reap a total of $26.5 million from the measures.
Pallister said taxing digital services is about making the tax system fairer to everyone.
"The present structure was a free ride for some and an additional unfair disadvantage to others," he told reporters, noting other jurisdictions are also taxing such services.
Fielding announced last week that Manitoba is projected to incur a $1.597-billion deficit for the 2021-22 fiscal year. That compares to a forecast deficit of $2.08 billion for 2020-21.
If not for the pandemic, which added costs and curbed tax revenues, the government said it would have achieved a surplus last year.
The province pegs the cost of COVID-19 expenditures and contingencies at $1.18 billion for the coming year compared with $1.98 billion for the fiscal year just ended.
Manitoba NDP Leader Wab Kinew told the Sun by phone after the premier spoke that he believed the Progressive Conservatives had failed to learn the lessons of the pandemic.
"I say that because when you get past the rhetoric in the speech and you look at the actual numbers in the budget document, there’s less money for health care at the bedside, schools continue to be underfunded and one that really bothers me at a personal level is they’ve frozen funding for personal care homes in Manitoba," said Kinew.
This year’s budget contains a line item for $9.3 million to add 120 new personal care home beds, but Kinew was unhappy to not see an increase in funding for previously existing beds and facilities.
"The thing that got such poor outcomes in Manitoba is the lack of care provided to the people who are in personal care homes right now," he said. "We simply don’t invest enough in the health-care aides and nurses who do good work but don’t have enough hours in the day to do one-on-one care."
With the additional tax cuts announced by the government in the budget, Kinew wonders where the money to pay for them is coming from.
The NDP leader said he needed time to think before commenting on the implementation of taxes on digital services like Netflix, but noted that the federal government is already moving forward with a similar initiative and acknowledged there’s a problem with large companies taking money out of the local economy but not putting anything back into it.
He felt the amount of money being put toward education in the budget was not enough to compensate for increasing enrolment numbers and inflation.
"When you break down into some of those line items and specifics, there’s some concerning things here. They’re cutting the budget for learning and outcomes, which is completely at odds with their claimed goal of trying to improve literacy and numeracy because that’s the actual part of the department that works on those things ... they’re also cutting support for kids with additional needs. It’s called ‘inclusion supports’ in the budget."
Kinew was also concerned about the lack of new business supports in the budget given that there are businesses still struggling because of pandemic restrictions and closures.
"I think there’s a few things that come to mind," said Kinew about what he would have liked to see get announced for Westman in the budget. "There’s less money going to all the regional health authorities. Prairie Mountain (Health) is going to be facing a challenging situation with the budget shortfall that is part of this plan.
"When we look at the ag industry, both for the AgriStability and for (Manitoba Agricultural Service Corporation) programs, I believe it’s $3 million less for AgriStability and $2 million less for MASC programs. Based on what we’ve been hearing from producers, that’s the wrong approach right now."
The MASC cuts, he said, are especially challenging for the industry in the wake of MASC offices around rural Manitoba having recently been closed.
Manitoba Liberal Leader Dougald Lamont didn’t mince words about the budget in a statement sent to members of the media.
"The PCs are doing what they always do: promising gold, and delivering pyrite. They keep promising investments that they never deliver. At a time of crisis, that is reckless," stated Lamont. "They are ignoring the needs of the vast majority of Manitobans while going out of their way to shovel borrowed money towards the wealthiest property owners and businesses in the province — including the premier himself."
Elaborating further, Lamont stated that the tax cuts in the budget will "overwhelmingly benefit the wealthy."
He also stated that the PCs promising to invest more in health care rings hollow after they dismantled the health-care system and underspent on health care during a pandemic.
The Manitoba Organization of Faculty Associations slammed the budget’s cut of $8.7 million in grants to universities and colleges, with president Scott Forbes calling the cut during a pandemic "tone-deaf" in a release.
In the same release, the organization expressed concern over what the cut would do to the already-tight budget of Brandon University.
"This province is well served by Brandon University, which allows students in the Westman region and beyond to access high quality and affordable post-secondary education," stated MOFA Brandon University representative Scott Grills.
"The PC strategy of cutting funding when the need for a university education has never been greater is ill advised. This budget puts considerable financial pressure on Brandon University and we are hopeful that local MLA’s will oppose any budget that cuts funding to the university community they represent."
In its statement on the budget, the Canadian Union of Public Employees said it was "out of touch today on every major issue facing the province."
"What we see in health care is stop-gap measures only," stated CUPE regional director Lee McLeod. "This does not address inadequate funding of PCHs."
CUPE also criticized a lack of increases in child care spending, a lack of funding for education, lack of investment in municipal services and cuts to post-secondary institutions.
The increase in tuition fees also raised the ire of the Canadian Federation of Students-Manitoba.
"Minister Ewasko has also chosen to raise tuition fees for a third consecutive year. It is now clear that the minister intends to utilize the powers granted through Bill 33 to raise the fees students pay rather than lower them," the CFS-M wrote in a statement. "Post-secondary institutions will play a central role in the rebuilding of our economy as we emerge from this crisis."
One group happy with the budget was the Manitoba Real Estate Association.
"Amid the ripple effects of COVID-19, rising shelter costs pose a risk of further dampening household disposable income levels," MREA president Stewart Elston was quoted as saying in a release.
"The phase-out of these taxes will help to ease the pressure on affordability we are seeing in the market and the impact it can have on consumer spending ability, which is critical to broader health of the economy.
The government has set a target of eliminating the deficit within eight years.
Fielding said the province has committed $100 million in the budget to the vaccine rollout, which he considers "more than enough money" to immunize Manitobans against COVID-19. More than one-third of the $100 million will go toward labour costs, he said.
Pandemic-related expenses aside, the government projects Health Department spending to reach $6.62 billion this year, compared with a budgeted $6.48 billion last year.
Education Department spending is projected to be $3.07 billion for the coming year, up from $3 billion.
Three government departments — Finance, Agriculture and Resource Development and Sport, Culture and Heritage — are seeing drops in their budgets this year.
Manitoba is anticipating federal transfer revenues this year to rise to $5.64 billion, compared with $5.14 billion budgeted last year. The latest forecast has the province actually receiving $5.87 billion from the feds for fiscal 2020-2021. Federal transfers are forecast to make up 31 per cent of all revenues.
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