Preamble: There are two specific areas (taxation and government spending) where the provincial government should continue to take action to send a signal to the business community that they are committed to creating a more competitive business climate in Manitoba, which would in turn increase the level of confidence within the business community.
In today’s globally competitive business environment it is imperative that government create a climate that attracts new business and allows existing businesses to prosper.
It is critical that a competitive tax framework must exist in an effort to give Manitoba businesses the opportunity, incentive and ability to grow and in turn stimulate economic growth in the province.
Resolution: That the Government of Manitoba:
a) Implement a long-term tax strategy in an effort to provide the business community with confidence and certainty that tax reduction is a priority.
b) Set a target of having Manitoba’s tax levels in the top three most competitive when compared with other provinces.
c) Looks at the tax threshold and indexation levels on an annual basis to ensure they are competitive with other jurisdictions.
Resolution Report:
The Manitoba Chambers of Commerce produces Resolution reports as part of its commitment to be accountable to its members. The reports are updated as matters unfold and have two components:
MCC Advocacy: Specific activities the MCC has done to help make this Resolution a reality.
Developments: All other information (e.g. government action, media coverage, reports) that relates to Resolution.
Advice, comments, and information sharing are welcome; simply enter a reply at the bottom of this post.
MCC Advocacy:
May 15, 2011: The 2011-2012 Resolutions were posted on the MCC website, listed as part of a comprehensive Report on AGM 2011 and then notice of this story was circulated through a news release as well as in an MCC E-Update which is sent to all MCC members, Media and Government.
June 22, 2011: Resolution books were sent to every MLA and every Member of Parliament that hails from Manitoba. The following had this Resolution specifically drawn to their attention with a detailed letter setting out the background to this issue, Government initiatives (where applicable), and an argument for the Resolution:
- The Minister Finance
September 2, 2011: The Manitoba BOLD campaign highlighted this issue with a news release entitled “Manitoba BOLD Campaign Focused on Taking Manitoba to a Whole New Level.”
The announcement included the following:
“The Manitoba BOLD Platform recommends the following policy measures to achieve this:
- Reduce the Corporate Income Tax rate to 10% over the next three years.
- Reduce the number of companies that pay the payroll tax over the next four years through a threshold approach.
- Reduce the education portion of property taxes by moving to an 80-20 funding model over the next four years with the long-term goal of elimination.
- Establish a Commission on Efficiencies that will engage the public in determining if provincial services are being provided in a cost-effective and efficient manner.”
To read more click here.
The Manitoba Chambers of Commerce was proud to be part of the BOLD initiative. In edition to posting this story on the MCC website it was mentioned on the MCC’s social media sites (Twitter, Facebook LinkedIn) and in its E-Update newsletter (goes out to 8,000 community and business leaders). As well, the MCC posted all announcements made by the parties during the election and each of those posts highlighted the BOLD initiative and provided links to further information on the BOLD recommendations.
Developments:
July 27, 2011: The Honourable Rosann Wowchuk, Minister of Finance, wrote to the Manitoba Chambers of Commerce on this issue.
Here is her response:
The Honourable Rosann Wowchuk
With regard to the comments related to the taxation resolution, I would strongly encourage the Manitoba Chambers of Commerce to consider our record of reducing business taxes as a whole. In fact, the numerous measures taken since 1999, which include the elimination of two business taxes, will save Manitoba businesses more than $424 million annually as of 2014. A list of some of the measures implemented includes:
- The general Corporation Capital Tax was eliminated;
- Our 10 per cent Manufacturing Investment Tax Credit has been expanded to include capital investment in new and used buildings, machinery and equipment, and made 70 per cent refundable;
- Our Research and Development Tax Credit has been raised from 15 per cent to 20 per cent and is being made 25 per cent refundable for in-house research and development (R&D) starting in 2011, 50 per cent refundable in 2012 and 100 per cent refundable where the R&D is conducted under contract with a prescribed research institution in Manitoba since 2010;
- The general Corporation Income Tax Rate has been reduced from 17 per cent to 12 per cent;
- The small business tax rate has been reduced from eight per net to zero per cent;
- The exemption level for the Health and Post Secondary Education Tax Levy 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.
- 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 attract and retain skilled graduates by rebating up to $25,000 of tuition costs, regardless of where the graduate studied.
In addition to this government’s record of reducing business taxes since 1999, we also introduced property tax savings that total $336 million annually and personal income tax savings that total $539 million annually. This represents combined business, income and property tax savings of $1.3 billion annually by 2014. These tax savings help to keep Manitoba one of the most affordable places in which to live, work and raise a family.
September 9, 2011: The NDP published a campaign announcement entitled “Selinger to Make 3000 More Small Businesses Tax-Free” that touched on this issue.
The announcement included the following:
“Today’s announcement to raise the small business income limit to $500,000 will build on Manitoba’s economic momentum. Now a total 15,500 small businesses will pay no tax and have more money to expand and create new jobs. This measure will save Manitoba businesses $14.6 million annually.”
To read more click here.
September 18, 2011: The NDP published a campaign announcement entitled “Selinger to Eliminate School Taxes for Seniors Farmers” that touched on this issue.
The announcement included the following:
“Today’s NDP will:
- Save farmers $14 million every year by eliminating the school tax on farm land.
- Save seniors a total of $35 million every year by eliminating the school tax on seniors.
- Reduce personal income tax rates over a four year time frame beginning by increasing the Basic Personal Exemption to equal that of Saskatchewan over the next four years.
To read more click here.
October 20, 2011: A Winnipeg Free Press editorial entitled “Past time to index tax rates” touched upon this issue.
It stated, in part, as follows:
Competitiveness starts at home and Manitoba lags behind. Tax cuts and policies across Canada have left this province mired with an uncompetitive tax regime, especially in personal taxes. Manitoba has among Canada’s highest personal income taxes, and compared to Saskatchewan, where substantial cuts have been made, the difference is stark: A two-earner family of four with a $60,000 income pays $3,042 in taxes; the same Saskatchewan family pays $725.
Manitoba’s taxes cannot match Saskatchewan’s in today’s financial climate, but the Selinger government can keep Manitobans from falling further behind. The obvious first step is to index the income tax system. Manitoba is one of three in Canada that does not index. Our basic personal exemption, $8,143, is the country’s third-lowest. The federal government began indexing in 2000.
To read more click here.
