Manitoba released its 2018-19 budget on March 12th and CFIB was on-hand to find out what impact it will have on your business. You told us that you wanted tax relief, steps to reduce the provincial deficit and return to balanced budgets by no later than 2022, and continued work to reduce red tape.
While the budget makes progress in some areas, CFIB is very concerned with the “Made-in-Manitoba” carbon tax that starts on September 1st, 2018 and results in Manitobans facing an overall tax increase of $117 million this year. You can read CFIB’s news release, Small business welcomes tax relief in Manitoba Budget; but clarity needed to ensure new carbon tax doesn’t add to overall cost burden.
Getting back to balanced budgets:
- The deficit is projected to decrease by $319 million to $521 million for the upcoming year;
- a more detailed year-over-year budget projection was provided, which shows a $142 million summary deficit in 2021-22. This is a positive step, but we are urging the government to release a longer-term plan to balance the budget; and
- Government remains committed to addressing the $9.4B in spent in labour costs by reducing staff by 8% (through attrition).
- The basic personal exemption will be increasing by $1,010 on January 1st, 2019 and another $1,010 on January 1st, 2020. This was your top priority for tax relief and should save taxpayers $173 million by 2020; and
- the small business corporate income tax threshold is increasing to $500,000 on January 1, 2019. This will deliver $7 million in tax relief for small business each year.
Red tape reduction:
- The Budget cited CFIB`s work and reiterated the government`s strong commitment to reducing red tape for business owners.
A costly carbon tax:
- With the carbon tax beginning on September 1st, Manitobans will face a net tax increase of $117 million, despite the Minister of Finance commitment that “all carbon tax revenues received over four years will be returned to Manitobans through tax reductions.” There is no clear plan to show how or if this will happen;
- the government stated that carbon tax revenues will also help reduce retail sales tax (PST) to 7% by 2020. We are still concerned that the Manitoba government isn’t providing you the overall tax relief that is needed.
Read CFIB's list of priorities for the budget:
Small Business Priorities for the 2018-19 Provincial Budget:
Priority #1 – Boldly getting back to balance
Balance the budget by no later than 2022, without further tax increases:
- limit short-term spending growth to less than current projections (2%);
- outline and publically release a multi-year plan to return to balanced budgets; and
- limit long-term spending increases to inflation and population growth after the budget is balanced.
Reduce government program costs to return to sustainable spending by:
- significantly reducing the size/cost of the provincial civil service (Crown Corps included);
- eliminate redundancy and excess staff through attrition;
- continue to narrow wage disparity (19.5%) between public and private sector workers;
- eliminate work week hours gap between public and private sector workers;
- move new hires from a defined benefit to defined contribution pension plan; and
- implement Fiscal Performance Reviews in future years.
Priority #2 – Deliver tax relief for small business
- increase the Small Business Corporate Income Tax Threshold to $500,000
- raise the Manitoba payroll tax exemption and index it to inflation
- eliminate the $5,000 cap on the Farmland School Tax Rebate program and review school taxes on farmland (and other small businesses)
- personal income tax: Increase the BPE by at least $2,000 by 2020;
- reduce the PST: Establish a plan to lower the PST back to 7% by 2020;
- commercial property tax: Develop a long-term plan to eliminate the ESL for commercial properties and adjust portioning regulations; and
- payroll tax: Implement a long-term plan to phase out the Health and Post-Secondary Education Tax Levy (the payroll tax).
Priority #3 – Continue reducing red tape:
Continue ongoing efforts to reduce red tape:
- renew and expand the Red Tape Reduction Task Force;
- continue to bring forward annual red tape reductions through a legislative vehicle;
- reduce red tape within WCB and Workplace Safety and Health;
- proceed with Red Tape Reduction Day Act; and
- introduce a Taxpayer Fairness and Service Code.
CFIB will continue to fight the “Made-in-Manitoba” carbon tax and make sure that the provincial government is providing the overall tax relief your business needs.