Running Back to Saskatoon
Author:
Victor Vrsnik
2000/05/18
Critical coverage of the provincial budget in the media has the Premier crying foul. Gary Doer went into damage control and accused the Winnipeg Sun of running an "absolutely false" headline.
The day after the budget, the cover of The Sun read "Highest Taxes in Canada." The headline referred to a cross-country tax comparison on page D14 of the budget that shows a Manitoba family of four earning $60,000 will pay $6,349 in income taxes this year. The same family will pay $6,190 in Regina and only $3,849 in Kenora. By their own admission, the NDP have made the Manitoba middle class the victims of the highest income taxes in Canada. So far no crocodile tears for the Premier.
The NDP want us to forget about year 2000 and wring our hands with delight for the impending tax cuts in 2001 and 2002. By then, they tell us, Manitoba will have restored its middle of the pack status with the other provinces. But the government should know that promises of tax relief do not constitute tax cuts.
Out of courtesy to the Premier, why not gaze a few years off into the future to see how Manitoba measures up against our neighbours.
The Saskatchewan versus Manitoba comparison is easily the most valid of any two provinces west of the Maritimes. Both prairie provinces share roughly the same demographics, the same economic performance, the same western political culture and are governed by the same party - the NDP.
Despite the similarities, Manitoba has practically given up on the tax cuts race while plucky Saskatchewan charges ahead.
Here is the vision of the future. By 2003, both Saskatchewan and Manitoba will have completed their tax reform packages. The surtaxes and flat taxes in both provinces will be rolled into a new three-bracket tax structure.
As it turns out, Saskatchewan will post far more competitive tax thresholds and rates. Income earners will pay 11 percent tax on income less that $35,000; 13 percent on income between $35,000 and $100,000; and 15 percent on income over $100,000.
In Manitoba, the middle-income rate will be 20 percent higher at 15.6 percent of income taxed between $30,544 and $65,000. And the high-income rate will be 16 percent higher at 17.5 percent of income taxed above only $65,000.
Even the poor are better off in Saskatchewan. Increased credits and exemptions will remove over 50,000 low-income earners from the tax rolls, compared to only 15,000 in Manitoba.
The tax comparison is bad enough were it not for the fact that practically every province in the country has moved to eliminate bracket creep by next year. Manitoba is one of the only holdouts. Future adjustments to the tax thresholds will be decided willy nilly. Without automatic indexation of all the tax thresholds to the rate of inflation, the NDP can choose to pit one income group against another in a form of tax-class warfare.
Vision is not the first word that springs to mind to summarize the provincial budget. Try myopia or shortsightedness. Because the only view left of Manitoba will likely be through the rear view mirror as more and more Manitobans queue up to leave the province like so many before them.
But this time the wagons need not stretch as far as Alberta or southern Ontario. Manitoba's economic refugees can now pitch their tents in tax-friendly Saskatchewan.
No one seriously expected Premier Doer to compete with Premiers Harris and Klein. But keeping pace with sluggish Saskatchewan was one expectation that should have kept the Manitoba NDP's feet to a tax cuts fire. Have our politicians already gone numb