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Recent hikes in school taxes are affecting the Manitoba government’s perception of its new tax-credit system’s benefits for homeowners.
Finance Minister Adrien Sala remarked on the unexpected rise in assessments from school divisions. Last year, the NDP government of Manitoba replaced an education tax refund system that previously provided homeowners with an annual $350 credit and a 50 percent rebate. This was substituted with a flat $1,500 credit that doesn’t adjust automatically with property tax escalations.
At the time of the system’s introduction, Premier Wab Kinew and fellow New Democrats showcased the new plan outside a bungalow in the St. Vital area, claiming homeowners would ultimately receive greater financial relief. However, the recent increases in both property values and school division mill rates have contradicted that initial promise.
The assessment of the highlighted bungalow has reportedly increased to $400,000, as per the City of Winnipeg’s records. With the higher mill rate implemented this year in the Louis Riel School Division, owners of similarly valued homes will see a reduction of $49 in tax credit compared to what they would have received under the former system, as confirmed by the government’s communications office.
The province indicated that the shift in tax structures—alongside the elimination of commercial property rebates—was expected to yield an additional $148 million annually for the government. They initially projected that around 83 percent of homeowners in middle to lower-value homes would be in a more advantageous position under the new credit structure. Nevertheless, as property assessments and mill rates continue to rise, this percentage is likely to decrease, since the $1,500 credit represents a shrinking portion of the overall property tax burden for many residents.
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“Next year, we anticipate that nearly 80 percent of Manitobans will still be better off, provided there aren’t significant spikes in school mill rates,” Sala stated.
Since taking office in 2023, the provincial government has prioritized affordability, temporarily suspending the provincial fuel tax before reinstating it at a reduced rate. Additionally, it ensured that hydroelectric rates remain frozen this year, although Manitoba Hydro is seeking gradual increases over the next three years.
Many municipalities and schools have experienced significant tax increases, which Sala attributes largely to funding freezes implemented by the previous Progressive Conservative administration. Concurrently, rates for automobile insurance are also up this year, and modifications to income tax structures may lead to higher costs for some Manitobans. This year’s state budget ceased the practice of adjusting income tax brackets in proportion to inflation annually. As a result, rising earnings may push some individuals into higher tax brackets without any changes to the brackets themselves.
This approach diverges from strategies adopted by most other provinces and is projected to bring in approximately $82 million extra per year initially. Tax experts suggest that this has the potential for continued revenue growth for the government. Michelle Gallant, a law professor specialized in income tax at the University of Manitoba, noted, “By not adjusting the brackets or rates, they are effectively increasing their income at our expense.”
The Opposition Progressive Conservatives argue that these income tax alterations will adversely affect citizens during a time of soaring living costs. Finance critic Lauren Stone described it as “a hidden tax” that eliminates any safeguard against inflation for taxpayers.
Source
globalnews.ca