The Manitoba Chambers of Commerce wrote to the Honourable Peter Bjornson; Minister of Entrepreneurship, Training and Trade; on two of its current Resolutions. Here is his response:
Payroll Tax Reform:
To put the Minister’s response into its proper (some might say ‘depressing’) context, here is an excerpt from the MCC’s letter to him (emphasis added):
In our Pre-Budget submission we acknowledged the extensive business tax relief that has occurred. However, we also pointed out that the Government of Manitoba’s current vision for tax relief ends in 2011. As you move forward to think about further tax reform, you need to think about reducing and ultimately eliminating this tax on jobs.
We cannot stress enough the insidious nature of this tax and its impact on our business environment. We recently spoke to a Manitoba company that had divided its operations into three so as not to trigger this tax – imagine the ‘needless’ administration involved in such a move. As well, they were approached by an out-of-province company about a possible merger but the company refused when they learned of the Payroll Tax.
The Minister’s response:
The Honourable Peter Bjornson
“With regard to the resolution on Payroll Tax Reform, I would like to thank the Manitoba Chambers for the acknowledgement of the extensive tax relief that has occurred and would encourage the Chamber to consider our government’s record of reducing business taxes as a whole. Numerous measures taken since 1999 will save Manitoba business more than $400 million annually as of 2011. A list of some of these measures implemented includes:
- The general Corporation Tax will be eliminated by the end of this year;
- Our 10% Manufacturing Investment Tax Credit has been expanded to include capital investment in new and used buildings, machinery and equipment, and made 70% refundable;
- Our Research and Development Tax Credit has been raised from 15% to 20% and is being made 25% refundable where the R&D is conducted under contract with a prescribed research institution in Manitoba starting in 2010;
- The general Corporation Income Tax Rate has been reduced from 17% to 12%;
- The small business tax rate has been reduced from 8% to 1% and falls to zero by the end of this year;
- The exemption level for the Health and Post-Secondary Tax (the payroll tax) was raised from $1.0 million to $1.25 million and the threshold below which employers pay the tax at a reduced rate increased from $2.0 million to $2.5 million. Only about 5% of employers pay this tax.
- The Co-op Education and Apprenticeship Tax Credits have been progressively expanded to assist with training costs for employers of students and graduates of co-op education programs, apprentices and newly certified journeypersons;
- Where a company is in need of greater access to credit, Manitoba has tripled the amount available under its Industrial Opportunities loan program and under its Small Business Venture Capital Tax Credit equity program; and
- The Tuition Fee Income Tax Rebate has been introduced to help Manitoba businesses to attract and retain skilled graduates by rebating up to $25,000 of tuition costs, regardless of where the graduate studied.
Corporate profits in Manitoba increased by 86%, or approximately $2 billion, between 1999 and 2007 while net corporation income tax revenues only rose by $93 million over the same period – or less than 5% of the profit increase. This illustrates the extent to which our tax reductions have left capital in the hands of Manitoba businesses.
Of the 22 North American Midwestern cities studied in the 2010 KPMG Competitive Alternatives Study, Winnipeg is the least expressive city in which to conduct business.
When all business taxes are considered, it is clear that Manitoba continues to have a competitive environment for business.”
You can access the Resolution Report on this issue here.
Technical Barriers to Trade:
“On the subject of Technical Barriers to Trade, the Governments of Canada and Manitoba stand together on reducing Technical Barriers to Trade, particularly in the areas of transparency and the use of international standards. Canada also advocates the creation of a mechanism to address specific trade barrier issues as they arise, which we are in full support. “
You can access the Resolution Report on this issue here.
