WINNIPEG – Thousands of Manitobans will save the equivalent of a meal out as the Progressive Conservative government makes changes to income tax brackets in its first budget.
But many seniors who weren’t expecting to pay school taxes in 2016 will.
The province will index personal income tax brackets in 2017 to the rate of inflation for the first time since 2000. That means if your income increases by the rate of inflation or less, you will no longer run the risk of being bumped into a higher tax bracket.
Even if you weren’t at risk of shifting into a new bracket, you will save money if your income is greater than $31,535 as more of your income will be taxed at a lower rate.
If you earn more than $68,156 in 2017, you can expect to save the equivalent of a sit-down dinner – $67.
If you earn $31,535 to $68,156, you can treat yourself to a fast-food meal with $10 in savings.
Those under $31,535 won’t save anything under the indexing, but 2,770 Manitobans will be removed from the tax roll as the basic personal amount is indexed to an estimated $9,292.
Manitoba Premier Brian Pallister and the Progressive Conservatives are backing away from eliminating school taxes for seniors, which the NDP had been working toward.
The revenue they bring in from that more than offsets the expense of the indexed tax brackets.
Ninety-eight per cent of seniors would have been exempt from paying school taxes in 2016 under the NDP.
But now, seniors with a family income of more than $63,500 will no longer receive any rebate on school taxes.
Finance Minister Cameron Friesen says they are undoing a political decision made by the NDP, while making sure seniors who need the support still get it.
“Tax policy must be principled. We were challenged to think about the changes the former administration brought. A government that in its last gasp takes the desperate move of trying to buy seniors with their own money… we would say that’s not a principled approach,” he said.
Just over half of senior homeowners will see some kind of rebate, but those with an income higher than $40,000 won’t save as much as they did last year.
The average senior household will see their rebate decrease from $400 to $300.
Opposition NDP Finance Critic James Allum says they need to look further at the school tax changes, but believes it could hurt some seniors.
“It may be a tremendous disappointment to middle-income seniors who were looking to stay in their homes longer. That was the objective of that particular commitment in the first place. They may find themselves left out and have to move from their home,” he said.
No mention was made in the budget about minimum wage increases. Friesen would not commit to whether or not one may happen this budget year.
The Tories have made a new pledge to balance the budget within eight years. They will have to eliminate an estimated billion-dollar deficit.
This budget takes the first step in that reduction with a pledge to save $122 million. Friesen pointed to the additional income from school taxes and some other small efficiencies, but did not explain how they will achieve much of those savings.
The Dean of the Asper School of Business Michael Benarroch says this budget sets the table for the next two terms, should the PCs be re-elected.
“More so than having significant changes in taxes or policies, it makes a number of indications of the direction they’re going to be taking, including controls on government spending into the future, finding different ways to stimulate economic growth and changing the way Manitobans are taxed,” he said.
Liberal leader Rana Bokhari eight years to balance the budget is a long time.
“These were the guys who were going to balance the budget. They were going to come in and fix everything. All you see is really the opposite of that. What’s really changed? Nothing,” she said.
Friesen says the government still plans to decrease the PST from eight to seven per cent in its first term.
Other than repeating some election promises, Friesen says many details on where money will be spent and saved are still to come.
Allum says the budget lacked substance and he expects bigger cuts next year.
“The shoe’s going to drop in the years to come. Mr. Pallister somehow believes he’s going to be in government for eight years, but if he continues along this path, we’re quite confident about the next election,” he said.