Winnipeg, March 12, 2018 – The Canadian Federation of Independent Business (CFIB) is pleased the Manitoba government is introducing much needed tax relief, and reducing the government’s deficit by $114 million to $726 million. However, we are concerned the Budget fails to provide clarity on how carbon tax revenues will be returned to business owners.
“Manitoba’s job creators were looking for three things in today’s budget: a bold plan to get back to balance by no later than 2022, by limiting short-term summary spending increases to no more than 2 per cent per year; delivering tax relief for small businesses; and continuing to reduce red tape,” said Jonathan Alward, CFIB’s Director of Provincial Affairs for Manitoba.
Getting back to balance: The Budget increased 2018-19 (summary) expenditures by 2.2 per cent and forecasts a deficit of $726 million for the year; a reduction of $114 million from the 2017 Budget.
“We are pleased to see the government offer a more detailed year-over-year budget projection, which reveals a $142 million summary deficit in 2021-22. While this is a step in the right direction to fix the province’s fiscal fundamentals, we urge the government to release a longer-term plan to balance the budget,” said Alward.
“It is also encouraging that the government remains committed to addressing $9.4 billion in labour costs, by reducing staff by eight per cent, through attrition,” added Alward. “Finding costs-savings through reducing the size and cost of government continues to be one of our members’ key priorities.”
Tax Relief: The Budget provides tax relief to business owners by increasing the small business corporate income tax threshold to $500,000 from $450,000 effective January 1, 2019. In addition, the Budget also commits to raise the basic personal exemption by $2,020 by 2020, increasing from $9,382 in 2018 to $11,402 in 2020. According to government calculations, raising the personal exemption will save taxpayers $173 million by 2020.
“Manitoba entrepreneurs welcome the government’s decision to increase the basic personal exemption amount and raise the small business corporate tax threshold,” noted Alward. “Raising the personal exemption will provide entrepreneurs and their customers much needed tax relief at a time when they are facing a number of rising costs.”
However, the federally mandated carbon tax will begin in Manitoba on September 1st, 2018, which is expected to generate $143 million in the 2018-2019 fiscal year, and roughly $248 million annually after. Although the government has committed that “all carbon tax revenues received over four years will be returned to Manitobans through tax reductions,” the government is creating a $102 million ‘conservation trust’, managed by the Manitoba Heritage Corporation, with little detail provided on how the funds will be distributed.
“CFIB is very concerned that despite the government’s commitments for tax relief outlined in this Budget, Manitobans will still be facing a $117 million net tax increase this fiscal year,” added Alward. “Transparency is needed to ensure that the government is giving back all carbon tax revenues to taxpayers, and building upon the important tax relief outlined today.”
Red tape reduction: In just one year, the province has moved from the back of the pack to head of the class. The exceptional leadership being shown by Premier Pallister and Minister Friesen has put Manitoba on track to become a North American leader in cutting red tape for small businesses. While the 2018 Budget did not outline any new red tape initiatives, it did reinforce the government’s strong commitment to reducing the regulatory burden for business owners.
“Overall, this budget sends positive signals that the government understands the cost increases small business owners are facing,” concluded Alward. “However, it is essential that all future carbon tax revenues are returned to Manitobans through tax relief, which isn’t the case today.”