Evelyn Jacks: Manitoba budget implements user feesPosted: April 18, 2012
Manitobans will pay more taxes following the April 17 Manitoba budget, thanks to increased user fees, broader application of retail sales taxes and a 3.5% hike in income taxes for the province's 680,000 taxpayers. The government of Canada's central province will also cut spending in a determined effort to reduce its deficit; the deficit will drop to $460 million in the fiscal year ending March 31, 2013, from $1 billion in 2011/12.
Debt is weighing down provincial governments across Canada and Manitoba is no exception. Debt service costs on Manitoba's $16-billion net debt is 6.2¢ for every $1 of revenue. And debt servicing costs will increase by $45 million in 2012/13, which represents 5.9% of all expenditures. Family services, by comparison, represents 7.4% of expenditures; education, 25.7%; health, 38.5%; community, economic and resource development, 16.1%; and, justice and other expenses, 6.4%.
The budget assumes real GDP growth in Manitoba of 2.4%, in line with Canada's rate, and nominal GDP growth of 4%.
Here are the budget's highlights:
- It's going to cost more to drive in Manitoba. Drivers will pay 2.5¢ a litre more in taxes when they fill up their tanks; diesel fuel will increase by the same amount and marked gasoline used by farmers will increase by 3¢ a litre. As well, car registration fees will increase by $35.
- Smokers will now pay 25¢ a cigarette in taxes, up from 22.5¢; taxes on fine cut tobacco will increase to 24¢ a gram, up from 21.5¢; and raw leaf tobacco will be 22.5¢, up from 20¢ a gram.
- Services such as spa services and haircuts over $50 are now subject to the 7% provincial retail sales.
- Risk management will cost more, with insurance premiums for property, liability, group life insurance premiums, trip cancellation and baggage insurance all subject to 7% provincial sales taxes.
- The basic personal amount of Manitoba income taxes will increase $250 to $8,634 in 2012. In real dollar terms that amounts to 10.8% or $27.
- The dividend tax credit for eligible dividends from corporations subject to the general tax rates will decrease to 8% from 11%, adding $13.5 million to provincial revenues.
- In some cases, those collecting and remitting the PST will have to file their returns less frequently: if collections are more than $5,000, you will file monthly; if collections are between $500 and $5,000, you will file quarterly; and if they are less than $500, annually.
- It will cost more to owe the province money on provincially administered taxes or repayments of refundable tax credits: the prime rate plus 6%, up from prime plus 4%.
- Bouncing a cheque will cost more: service fees are increased to $25 from $20 for each occurrence.
- The Corporate Capital Tax will increase to 4%.
There are also a number of changes to tax credits available to corporations:
- A new Data Processing Investment Tax Credit will allow a 4% credit on the capital cost of new buildings and 7% on the capital cost of machinery and equipment purchased or leased for use in data-processing centres after budget date and before 2016. Costs to replace or improve property will be eligible, too.
- Accommodation costs for up to $250 a night will be allowed as eligible costs under the Film & Video Production Tax Credit after April 17, 2012.
- After 2012, the Co-op Education & Apprenticeship Tax Credit will expand for apprentices and journey people outside of Winnipeg. For Early Level Apprentices the credit is enhanced to 15% of wages to a maximum of $3,000 (up from 10% to a maximum of $2,000); for Advanced Level Apprentices, the credit doubled to 10% of wages to a maximum amount of $5,000; the same is true of credits on wages for journey people.
- The Nutrient Management Tax Credit provides for a credit of 10% of capital cost of prescribed nutrient management equipment, used to clean up lakes and water systems.
- Starting in 2012, half of the Manitoba Research & Development Tax Credit of 20% will become a refundable tax credit for companies that do in-house R&D.
New economic initiatives in the budget include the first bilingual World Trade Centre to provide Manitoba businesses with access to a global network, $1.5 million to the Metis Economic Development Fund and a new Mining Academy to open in Flin Flon.
When ranked across all other provinces, Manitoba boasts an ideal standard of living for single graduates who earn $50,000. Total personal costs and taxes for that person amount to $15,535, when graduate tax credits are taken into account. Only New Brunswick's costs are lower at $13,634. By comparison, costs in British Columbia are $32,959; in Ontario, $26,576; and in Alberta, $20,316.
Evelyn Jacks is president of Knowledge Bureau and covered the budget for province-wide news station CJOB with host Richard Cloutier.