A Welcome Tax Review
by Elisabeth Saftiuk, MCC VP of Policy & Government Relations
Last week, the Government of Manitoba announced a series of initiatives meant to create a more competitive economic environment in Manitoba to support job growth, drive investment, and spur economic growth. (Read the Province of Manitoba’s news release from October 19, 2022.)
The provincial government announced the establishment of the Premier’s Economic Advisory Council on Competitiveness, which will focus on Manitoba’s competitiveness in relation to other provinces and the United States. (Pictured from left to right: Bram Strain, CEO, Business Council of Manitoba; Elisabeth Saftiuk, Vice-President, MCC Policy & Government Relations; Premier Heather Stefanson; Minister Cliff Cullen; Minister Cameron Friesen attend the announcement in the office of the Business Council of Manitoba.)
Chaired by Richardson International President and CEO, Curt Vossen, the council will provide advice, guidance, and recommendations on issues pertaining to Manitoba’s economic growth and prosperity. The premier also established a tax competitiveness working group to support the council. The working group will provide advice to support the ongoing modernization of Manitoba’s taxation framework. The Manitoba Chambers of Commerce will have representation on both the Premier’s Advisory Council on Competitiveness and the Tax Competitiveness Working Group.
Very special thanks to Kevin Ploegman (pictured left), Director, Fort Group Chartered Professional Accountants Inc. and MCC Board of Directors treasurer for lending his expertise to and representing our interests on this committee.
The Manitoba Chambers of Commerce commends the Government of Manitoba for this highly anticipated announcement and for its commitment to modernizing Manitoba’s tax system with a focus on competitiveness. A review of Manitoba’s taxation framework, including both corporate and personal taxes, is an initiative for which the Manitoba Chambers of Commerce has long been advocating. The review also has the full support of the chamber network and Manitoba’s business community.
All tax policy must support the principles of growth, transparency, and accountability. First and foremost, Manitoba’s tax system should stimulate economic growth. Secondly, our tax system should be structured so that taxpayers clearly understand its intent, and so authorities can administer it in an impartial and predictable manner. Finally, the government must be publicly accountable to taxpayers for the money it raises and spends.
In today’s globally competitive business environment, government must create a climate that enables existing businesses to grow, that attracts new residents and enterprises, and that is conducive to new investment. Unfortunately, when we look at the nationwide economic competition landscape, other provinces are outplaying us.
Let’s consider recent post-secondary graduates with a fresh certificate, diploma, or degree in hand assessing their futures: They look at where they can get a job, where they can keep more of the money they earn, and where their quality of life will be best. Young people are doing their research; and when they do so, what will they find out?
- Manitoba has the third lowest Basic Personal Amount (BPA) in Canada, behind only Nova Scotia and Newfoundland and Labrador, at $10,145. The BPA is a non-refundable tax credit that provides full relief from provincial income tax to all tax filers with taxable income below the BPA. In other words, it is the amount of income earned before it is taxed by the government. For comparison, Manitoba’s BPA is $6,000 lower than Saskatchewan’s, which sits at $16,615.
- In terms of personal income tax rates, Manitoba’s lowest tax rate is 10.8% and the tax bracket ends at $34,431. For comparison, Saskatchewan’s lowest income tax rate is 10.5% and their lowest tax bracket ends at $46,773. What is even more problematic from a competitiveness standpoint is that the highest tax bracket in Manitoba starts at $74,417 with a rate of 17.4%. In Saskatchewan, the highest tax rate is 14.5% and the highest income tax bracket starts at $144,639. This threshold is almost twice as high.
With a highly mobile workforce and labour shortages across the country, competitive personal income tax rates are essential. Manitoba’s taxation structure is very much linked to our ability to compete for talent.
Businesses make decisions in the same way. Businesses are not restricted by borders, and they will go where they can be most successful. A friendlier tax framework is absolutely a part of their decision-making.
The Health and Post Secondary Education Tax Levy, or the payroll tax as it is more commonly known, is tax imposed on remuneration that is paid to employees in Manitoba. Employers with total remuneration above $1.75 million are subject to this levy. When we poll business leaders, they highlight the payroll tax as one of the key measures the province should focus on to address competitiveness. We commend this government on having twice raised the threshold, but the tax remains a disincentive to growth, and a considerable pain point for business.
The Manitoba Chambers of Commerce is keen to participate in this tax review and to contribute insights on behalf of our valued members. We do not expect these changes to happen overnight, and we appreciate that it’s important for the Province to take a balanced approach. However, we look forward to the benefits the review will deliver for Manitoba’s economy, prosperity, and to our ability to attract and retain talent.
Also announced at the press conference last week: the Small Business Minimum Wage Adjustment Program – click here to learn about this support program.