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2017 Manitoba Budget is a “missed opportunity”

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Issue:

The 2017 Manitoba Budget is in the books for another year and it looks like the provincial government will continue its trend of unsustainable spending, with no clear road map to get back to balanced budgets.

CFIB surveyed Manitoba small business owners on what they wanted to see in the Budget. Their top priorities included; fixing the province’s fiscal fundamentals, improving tax competitiveness, and continuing to reduce red tape. You can read CFIB’s pre-budget submission.

While CFIB commends the Manitoba government for taking bold steps to reduce red tape facings all Manitobans, entrepreneurs hoped that the government would have been as bold in tackling the deficit. Instead, what small business owners saw was a giant missed opportunity!

DISCUSSING PRE-BUDGET PRIORITIES

3 men

CFIB’s Gavin Kaisaris (L) and Jonathan Alward (R), present 2017 pre-budget priorities to Hon. Cameron Friesen, Minister of Finance

Key Highlights of Manitoba’s 2017 Budget:

  • Spending increase of 3.1 per cent, which is well above the sustainable threshold;
  • Provincial deficit remains alarmingly high at $840 million;
  • No clear road map is provided to get back to balanced budgets;
  • No new tax measures to help small businesses;
  • A continued strong commitment to reducing red tape.

 

Small businesses key priorities:

Sustainable Spending:

CFIB urged the province to limit short-term spending increases to no more than one per cent. With 2017-18 expenditures increasing by 3.1 per cent, it will be extremely difficult to balance the budget by 2024, let alone any earlier. The provincial government needs to take significant steps now to bend their cost curve. While freezing public sector wages is a positive first step, it only addresses one part of the problem. Manitoba needs to reduce the size of its government. In fact, 98 per cent of Manitoba entrepreneurs support the government reducing its size through workforce attrition.

Tax Competitiveness:

While pleased there were no tax increases or new taxes introduced, the 2017 Budget did little to improve the tax competitiveness for Manitoba’s small businesses. Last year, the provincial government took a step in the right direction by indexing its personal income tax system to inflation. However, the Health and Post-Secondary Education Tax Levy, commonly known as the payroll tax, is not indexed to inflation and becomes even more unaffordable every year.

Manitoba entrepreneurs also asked the government to deliver on its commitment to increase the Small Business Corporate Income Tax Threshold to $500,000. With Nova Scotia’s recent announcement to increase their threshold to $500,000, Manitoba will be the only province left to do so.

Red Tape:

We have previously commended the Manitoba Government’s bold actions in reducing red tape for Manitoba entrepreneurs. The Budget highlights Bill 22, the Regulatory Accountability Act and Amendments to the Statutes and Regulations Act, which will create a framework to measure and report regulations, improves accountability, and will reduce one piece of compliance for every new one introduced.

Next Steps:

Make no mistake; the provincial government has taken many positive steps over the past year to begin improving Manitoba’s small business climate. But the province can no longer continue with its moderate deficit reduction policies, which we all know will not solve the problem. Business owners understand that today’s deficits are tomorrow’s taxes, so we hope Budget 2018 will outline a clear plan to boldly fix the province’s fiscal fundamentals.