The 2008 Manitoba Budget Address

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Keeping Manitoba Affordable

Since 1999, our government has delivered the largest personal and business tax cuts in Manitoba history. Mr. Speaker, with today’s budget the tax cuts we have delivered since taking office will save Manitobans more than $1 billion in taxes annually by 2009.

We have provided this unprecedented tax relief while balancing every budget, paying down the debt and pension liability, and investing in vital programs and services. This balanced approach to tax relief is part of our commitment to keep Manitoba affordable for families and for businesses.

Mr. Speaker, Budget 2008 moves forward with new tax cuts that will save Manitobans and businesses $182 million annually. Added to the measures announced in previous budgets that take effect this year and next, taxpayers will have $292 million in new annual savings by 2010.

These tax reductions include personal income and property tax savings, business tax reductions, and targeted tax relief to help businesses challenged by global competition.

The impact of education funding on property taxes has long been an issue of public concern, and our government is continuing to act to address this. Mr. Speaker, I am pleased to announce that today’s budget increases the Education Property Tax Credit by another $75 to $600 in 2008, saving Manitobans an additional $24.5 million annually. Since 1999, the credit has increased by $350, saving Manitobans more than $117 million each year.

This year’s school funding includes a $16 million Tax Incentive Grant to help school districts freeze taxes. In Winnipeg School Division, Manitoba’s largest, the freeze saves a homeowner with a $125,000 home more than $25. Combined with the $75 tax credit increase, these savings are more than $100 this year.

The Farmland School Tax Rebate increases to 70% in 2008, up from 65% in 2007 and 33% in 2004, the year it began. It will return more than $30 million to Manitoba farmers in 2008 as a rebate on school taxes paid.

These measures are part of a comprehensive action plan that has seen property taxes reduced in each of our nine budgets. We have increased the Education Property Tax Credit, raised the seniors’ portion of the tax credit, cut farmland school taxes, and eliminated the residential Education Support Levy a year earlier than promised. Taken together, these measures will save Manitobans $250 million in education property taxes in 2008.

Mr. Speaker, reducing education property taxes each and every year is paying dividends. Since 1999, the education taxes on a home assessed at $125,000 have been reduced by an average of 22%, compared to an average increase of 60% during the 1990s.

Mr. Speaker, great progress has been made in making education property taxes more affordable in Manitoba. We will continue this effort as we move toward funding 80% of the total cost of public education, further reducing the reliance on education property taxes.

We are moving forward on our multiyear plan for improving personal tax brackets and rates. Effective January 1, 2009, we will:

• reduce the tax rate for the lowest income bracket to 10.8%;
  
  
• raise the threshold for the middle-income bracket to $31,000; and
  
  
• raise the threshold for the top bracket to $67,000.

Budget 2008 provides additional personal tax reductions by:

• adding $100 to the Basic Personal Amount for 2009, bringing the total increase in this amount to $1,340 since 1999; and
  
  
• adding $100 to the Spousal and Dependent Amounts.

Mr. Speaker, I am proud to report that a total of 2,100 low-income Manitobans will be removed from the tax rolls as a result of these new measures.

Today’s budget also increases the basic amount of the Personal Tax Credit to $195 for 2009, benefiting over 281,000 households.

As previously announced, for Manitobans taking advantage of the new Tax-Free Savings Account introduced by the 2008 federal budget, accumulations and withdrawals from those accounts will not be taxed by the province and will not affect benefits under income-tested programs like Pharmacare.

We are proud that Manitoba has the best home care system in the country, serving some 39,000 Manitobans annually. Informal caregivers play a vital role in helping home care clients remain independent as long as possible. The majority of these caregivers are women. Many are aging or are supporting dependent children and caring for aged parents at the same time. Many work part time or are not employed.

Mr. Speaker, today’s budget follows through on our promise to provide support to those caregivers with a new Primary Caregiver Tax Credit of $85 per month, up to $1,020 per year for each person cared for starting in 2009. This unique credit is fully refundable, which makes it available to eligible caregivers even if they do not have taxable income.

Mr. Speaker, with today’s personal income tax reductions and measures our government has taken in previous years, Manitobans will save $455 million annually in personal income taxes in 2010 and subsequent years.

Since 1999, Manitoba businesses have also benefited from a series of tax reductions aimed at keeping our province competitive. Our plan has reduced both small business and corporation income taxes and Budget 2008 builds on this progress with another $120 million in general and targeted tax cuts.

Mr. Speaker, Manitoba already has the lowest small business tax rate in the country. When the small business rate drops to 1% in January 2009, Manitoba small businesses will save an additional $9.7 million annually. This benefits 80% of taxable businesses.

The general Corporation Income Tax rate will drop to 12% in July 2009. This tax was 17% when we took office and our reductions since then are the first in half a century. Our next goal will be to reduce it to 11% in future years, subject to balancing the budget.

Capital taxes are often criticized for discouraging the investments needed to build more productive and competitive businesses. We listened to this advice and committed to phasing out the general Corporation Capital Tax before 2011.

Budget 2007 reduced the general Corporation Capital Tax rate from 0.5% to 0.4% for corporations with fiscal years starting after January 1, 2008. Today I can confirm that we will cut the rate to 0.3% for their next fiscal year and to 0.2% for the year after that. After December 31, 2010, the general Corporation Capital Tax will be completely eliminated.

Mr. Speaker, for manufacturers and processors particularly impacted by the high Canadian dollar, I am pleased to announce that we will:

• eliminate the Corporation Capital Tax for manufacturers and processors as of July 2008, freeing up about $25 million annually to invest in enhancing productivity and competitiveness; and
  
  
• extend the Manufacturing Investment Tax Credit to the end of 2011, providing added certainty to business and building on the recent increase of the refundable portion of the credit to 70% which saves businesses $2.8 million annually.

Today’s budget also extends the Community Enterprise Development Tax Credit.

Mr. Speaker, Budget 2008 offers tax credits that help build a skilled workforce in Manitoba. The Co-operative Education Tax Credit is being expanded and renamed as the Co-op Education and Apprenticeship Tax Credits. The new component will provide an employer who hires a recent graduate from an apprenticeship program with a tax credit of up to $2,500 a year for up to two years for each journeyperson they hire.

Budget 2008 also uses strategic tax measures to attract and grow new industries. Manitoba’s Film and Video Production Tax Credit is one such measure that has been tremendously successful. This is the fifth consecutive year that production values will reach $100 million or more annually.

Mr. Speaker, I am pleased to announce that we are enhancing the very successful Film and Video Production Tax Credit to maintain our competitive advantage and continue to build the local film industry by:

• introducing a 5% bonus for films with a Manitoba producer;
  
  
• doubling the Frequent Filming bonus to 10%; and
  
  
• refining the skills transfer requirements.

Based on the success of our film and video tax incentive, Budget 2008 adds two new tax credit programs to encourage new growth in emerging industries. The first is Manitoba’s rapidly-developing digital media industry, which has the potential for explosive growth.

Mr. Speaker, I am pleased to introduce the new Interactive Digital Media Tax Credit. This replaces the New Media Production Grant program and will provide up to $2 million to encourage development of new digital media products through a refundable tax credit equal to 40% of eligible Manitoba labour costs. This represents a 10-fold increase in assistance to this emerging industry.

Manitoba’s book publishing industry is also a sector with strong growth potential. Currently, it is a $7 million industry, with seventy-five percent of book sales by local publishers occurring beyond our borders.

Mr. Speaker, I am pleased to announce that today’s budget introduces a new Book Publishing Tax Credit which will help this industry expand by providing a refundable income tax credit equal to 40% of eligible Manitoba labour costs. This tax credit will also encourage environmentally-responsible publishing by offering an additional 10% bonus for books printed on forest-friendly paper.

This forest-friendly incentive is just one of the tax measures contained in today’s budget that are part of our broader effort to build a sustainable economy. The budget also extends the Riparian Tax Credit and contains a new measure to help reduce greenhouse gas emissions and advance our movement toward a carbon-neutral economy.

We are working to reduce the emissions from coal as an energy source. We have addressed the use of coal by Manitoba Hydro, and now we will work with other industries to make the transition from coal to less environmentally damaging fuels.

Mr. Speaker, today I am announcing we will introduce a new emissions tax on the burning of coal - $10 per tonne of carbon-dioxide-equivalent emissions. We plan to have this tax be revenue neutral – the money raised will be invested to help industries make an economically sustainable transition. To give industry time to adjust, this tax will not take effect before July 2011.