By Jonathan Alward
Published in the Winnipeg Sun March 19, 2018
Nearly one year ago I wrote a column to voice the concerns of small business owners about Manitoba’s 2017 budget. As one reporter described, it was “one budget to annoy them all” - small business owners included. The budget offered too little of the bold action needed to address Manitoba’s daunting challenges.
Much has changed since then and small business tax relief is needed more than ever. Simply put: the province’s job creators couldn’t afford to be overlooked in Manitoba’s 2018 budget. While the budget took steps to address some of these concerns, we are left with more questions than answers.
What did businesses want from this budget? In a recent survey, the Canadian Federation of Independent Business (CFIB) asked Manitoba small business owners this question. Their three top priorities included a plan to get back to balanced budgets by no later than 2022, more action to cut red tape, and much needed tax relief.
On the first two priorities, we’ve seen some action. The province has taken significant steps to slow its spending growth and the work is paying off: it will be limited to 2.2 per cent in 2018-19 and the deficit should shrink by $319 million. Similarly, Manitoba is making great progress to limit red tape, so business owners can spend less time filling out unnecessary paperwork and more time growing their business.
However, when it comes to tax relief, business owners need more clarity from the government.
Premier Pallister understands the growing costs impacting small businesses and the need for tax relief. In a recent interview, the premier agreed that Manitobans are facing a “triple threat” of increasing costs from higher federal small business taxes, rising interest rates, and potential Manitoba Hydro rate hikes. And let’s not forget about payroll tax increases, property tax hikes, and the incoming carbon tax.
Manitoba’s 2018 budget took important steps to address these challenges, with the commitment to increase the basic personal exemption to over $11,400 by January 1, 2020. CFIB members placed this as their top priority for tax relief because it should put more money directly into their customers’ pockets. Similarly, increasing the small business corporate income tax threshold to $500,000 offers targeted relief.
But when you take a closer look and review the budget as a whole, cracks begin to appear. Manitobans will be hit with a carbon tax on September 1st, 2018 and will face a net tax increase of $117 million, despite the Finance Minister’s commitment that “all carbon tax revenues received over four years will be returned to Manitobans through tax reductions.”
The equation doesn’t add up, in more ways than one.
The Manitoba government clearly recognizes the important role small businesses play in the economy and the positive impact tax relief can have. Just last September, Premier Pallister stood with CFIB to condemn proposed federal tax changes stating: “those proposals could only come from a government that does not understand the importance of small and medium-sized enterprise to the Canadian economy.”
But, the budget’s overall tax increase tells a different story. Small business owners need actual tax relief and cost certainty. Most of all, they need answers.
Unfortunately, the 2018 budget leaves us with more questions. The province is taking bold steps to limit spending and reduce red tape, but only time will tell if the Manitoba government is truly committed to delivering the overall tax relief that small business owners need.
- Jonathan Alward is the Manitoba director of provincial affairs with the Canadian Federation of Independent Business (CFIB). CFIB advocates on behalf of 4,800 small and medium-sized businesses in Manitoba and 110,000 members across Canada. Jonathan can be reached at [email protected] or you can follow him on Twitter @cfibMB.