Taxpayers get debt, not tax relief

Manitoba’s latest budget did not make life more affordable.

Instead, it covers up tax hikes and piles the cost of government debt on current and future generations of Manitobans.

The government is highlighting its so-called tax relief in the budget.

The government is removing the Retail Sales Tax from a few more grocery items. Most grocery items are already RST free, but the government is extending the exemption to ready-to-eat items like rotisserie chickens. This will save taxpayers $32 million annually.

The budget is also changing the Homeowners Affordability Tax Credit so some homeowners will save on their education property tax bill. However, homeowners with homes valued at more than $1 million will be paying more.

This is really a bait-and-switch for taxpayers, because those savings are washed out by a sneaky income tax hike called bracket creep.

Last year, the government stopped indexing income tax brackets to inflation. That’s a sneaky tax hike called bracket creep. When the government stops indexing tax brackets, it means that inflation can bump taxpayers into a higher bracket and increase their tax bill.

Bracket creep cost taxpayers $82 million last year. All the tax relief in this budget will save taxpayers about $71 million. That means taxpayers are worse off overall. And bracket creep will take more of your money every year because of inflation.

Before finally getting rid of bracket creep in 2024, Nova Scotia had not indexed its tax brackets since 2000. A taxpayer who made $40,000 in 2000, and only got cost-of-living raises since then, paid about $1,300 more in taxes in 2023 because of bracket creep. But that’s only part of the story, because that same taxpayer paid more in taxes because of bracket creep every single year in between.

And despite taking more from taxpayers, the government is still borrowing money this year.

The government is increasing the debt by $3.2 billion compared to last year’s budget. By the end of the year, the debt will be $39.7 billion.

That means every Manitoban’s share of the provincial debt will be more than $26,000 this year.

Debt interest payments will cost taxpayers $2.4 billion dollars this year and is still the government’s third-largest expense behind only health care and education.

That should frustrate taxpayers, because the government is taking in record amounts of revenue and still overspending.

Revenues went up $1.8 billion this year, but instead of paying down the debt or deliver relief for taxpayers, the government is hiking spending by more than $1.5 billion.

In fact, the Manitoba government is spending more per person than any other province in Western Canada.

The government is projected to spend about $18,150 per person this year. That’s more than the provincial governments of Alberta, Saskatchewan and British Columbia.

That includes the big spending and borrowing British Columbia government that received a credit rating downgrade because of the reckless borrowing in its budget.

And Manitoba is on the same path to ruin. A credit rating downgrade makes it more expensive for the government to borrow money. And for every increase of one per cent in interest rates, the cost of debt interest payments increases by $60 million.

The government is still promising to balance the budget next year, with a razor-thin $8-million surplus. One extra tariff, natural disaster or other unexpected hit to the revenue column can destroy that projection in a flash.

That means if the government doesn’t get its spending problem under control, that balanced budget promise is as good as gone.

This government has a spending problem.

Raising taxes to deal with it is the same as taking out another, bigger credit card to pay back your first credit card. It’s not a real solution.

The only real solution is to find savings and cut spending so the government can start to pay down debt.

Gage Haubrich is the prairie director and Ethan Fisher is the communications co-ordinator for the Canadian Taxpayers Federation.