CFIB pleased to see HE Levy exemption increase, continued deficit reduction
Winnipeg, March 19, 2020 – The Canadian Federation of Independent Business (CFIB) is pleased the 2020 Manitoba Budget provides much needed tax relief including increasing the Health and Post Secondary Education Tax Levy’s threshold for the first time since 2008. Although the revenue and expenditure forecasts are rapidly changing, the Budget is currently forecasting a reduced deficit ($220 million in 2020-21, down $105 million from the Q3 forecast for the 2019-20 Budget) and projects a return to surpluses in the 2022-23 fiscal year.
“While economic projections have changed significantly in the week since the Budget was finalized, it does provide some needed cost relief for small businesses to navigate the year ahead,” said Jonathan Alward, CFIB’s director, prairie region. “However, with most of the province’s small business already facing revenue shortfalls due to the COVID-19 pandemic, more help is needed today.”
“In addition to the tax relief measures outlined in the Budget, we are asking for the provincial government to provide other help for small businesses during the pandemic,” added Alward. “This help could include delaying taxes payable, monthly bills from Manitoba’s Crown Corporations and waiving interest and penalties. Several provincial governments have already announced similar help.”
Tax relief: Manitoba entrepreneurs welcome the government’s decision to increase the HE Levy exemption threshold to $1.5 million beginning on January 1, 2021. The Basic Personal Exemption amount will remain indexed for foreseeable future, but business owners will be disappointed that Manitoba’s amount remains the lowest west of Newfoundland. CFIB is also concerned the 10 per cent decrease in vehicle registration fees will not apply to commercial vehicles.
Fiscal projections: The province is currently forecasting deficit reduction in 2020-21 (moving to $220 million, down from the last budget ($360 million)). Expenditures are projected to increase by just 2.0% from the latest fiscal update, below the combined forecasted increases to CPI (1.9%) and population growth (1.1%). However, the projected deficit reduction is in large part because of increases in Federal Equalization and an 8.7% projected growth in income taxes from the last budget.
Given the rapidly changing economy in wake of the COVID-19 epidemic, the Government of Manitoba released a supplemental document with the Budget to forecast the associated potential cost increases and revenue shortfalls. The COVID-19 Emergency Supplement to Budget 2020 estimates that revenue shortfalls and potential additional health care expenditures would cost a combined $359 million (medium scenario). This scenario forecasts that GDP growth is 1.3 per cent less than the current forecast. It is estimated that a one per cent decrease in nominal GDP growth in Manitoba roughly equates to approximately $200 million in reduced revenues.
Importantly, the province’s ‘Rainy Day Fund’ grew significantly over the last two years to $872 million at the end of the 2020-21 fiscal year. Given the COVID-19 pandemic and other challenges so far in 2020, it appears that rebuilding the ‘Rainy Day Fund’ was a prudent decision.
To arrange an interview with Jonathan Alward, please call (431) 998-4498, or e-mail email@example.com. You can also follow CFIB Manitoba on Twitter @cfibMB.
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members (4,800 in Manitoba) across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings.