WINNIPEG: The Canadian Taxpayers Federation (CTF) responded to the 2006 provincial budget presented in the legislature today. Overall spending increased by 6.8 percent with a dip into the Fiscal Stabilization Fund (FSF) to the tune of $85 million.

Middle tax rate reduced, BPE increased

Modest income tax relief in the provincial budget will not be realized until January of 2007. "Manitobans will not see an immediate impact in their take-home pay because the NDP government decided to delay the reduction of the middle tax rate to 13 percent until next year," stated Provincial Director Adrienne Batra. "Total income tax savings including the small increase in the basic personal exemption for a Manitoban earning $40,000 a year will be $65.90, or $5 a month," added Batra.

Bracket Creep continues

"Although the small tax reductions are a welcome measure for overly taxed Manitobans, the province has not indexed tax brackets to the rate of inflation thereby allowing bracket creep to continue, " said Batra. Bracket creep is defined when inflation pushes income into higher tax brackets resulting in an increase in income taxes with no increase in purchasing power. "Because the NDP government has allowed this insidious tax to continue unabated, most savings in January of 2007 will be eroded."

Education Support Levy eliminated, farmland school tax credit increased

The NDP government fulfilled its commitment in the 2006 budget to eliminate the education support levy on property taxes and also provided much needed school tax relief to Manitoba's rural communities by increasing the farmland school tax credit to 60 percent. "The CTF is pleased the provincial government stuck to their commitment to reduce the education support levy, which will save homeowners on average $153 a year on a $150,000 home," stated Batra. "The challenge for homeowners is now going to be the portion of school taxes that continues to increase."

Debt and spending

The NDP government increased spending by 6.8 per cent in budget 2006, the increases coming in the predictable areas of health care and the civil service commission; with spending on the rise so too is Manitoba's debt which has ballooned to $16.6 billion. "Even though the budget is balanced, the NDP government continues to spend well beyond its means," added Batra noting the province dipped into the FSF for $85 million.
"As the debt continues to climb to over $16.6 billion for government operations, equalization payments are at a historic high with over $3 billion coming from Ottawa - at some point Manitoba is going to have to get off the welfare program of equalization and move our province into the 'have' status," concluded Batra.