Research shows that payroll taxes are the most punitive taxes for small businesses. They are profit insensitive, punish growth, and affect smaller businesses more as they are labour-intensive. Simply put, we need to lessen the payroll tax burden we place on small businesses if we want our economy to grow to its potential.
However, for businesses in Manitoba, the federal and provincial property tax burden is bad and growing. Federal payroll taxes are increasing, led by seven straight years of CPP premium increases. Provincially, the Health and Post Secondary Education Tax Levy (the Manitoba Payroll Tax) is high and increasing each year.
According to a national report from CFIB, Manitoba’s businesses have the fourth highest payroll tax burden in the country, ranking just behind British Columbia and Ontario.
The Manitoba Payroll Tax’s exemption levels are not indexed to inflation and have not risen since 2008. For example, the lower exemption threshold is $1.25 million, but would have been $1.47 million in 2019 had it been indexed to inflation over the period. At a lower exemption threshold of $1.5 million, Manitoba would rank below the national average in terms of its overall payroll tax burden.
CFIB challenged Manitoba parties to:
- Raise Manitoba’s Health and Post Secondary Education Tax Levy exemption to $2,500,000 and index the exemption to inflation; and
- Implement a longer-term plan to phase out the Health and Post Secondary Education Tax Levy.