Manitoba's Opposition NDP won't commit to keeping tax cuts promised in latest budget if elected this year
Revenue lost from promised income tax cuts would put a new government in tough spot, says U of W economist
Manitobans will have to wait and see if an NDP government would keep the $500 million in tax cuts promised by the Progressive Conservative government in Tuesday's budget.
The 2023 spending plan unveiled by Premier Heather Stefanson's government includes a series of tax breaks for Manitobans, some of which would not come into effect until 2024 — months after an election that will come on or before Oct. 3.
"Budgets in a election year are always a little bit different.… You have one eye looking at the present, one eye looking in the future of their political competition," said Philippe Cyrenne, a professor of economics at the University of Winnipeg, following the release of the Progressive Conservative government's 2023 budget on Tuesday.
But should the government change in the election, the next provincial administration would be left with less revenue, said Cyrenne.
"It eliminates some [fiscal] choices," he said. "Most governments coming in like to have the flexibility to set their own priorities."
A new government would also have the option of not following through on the changes promised for next year, said Cyrenne.
"It's called the first-move advantage... So now it's on the table," but if the government changes, "then you [the new government] have to remove it," he said.
Opposition NDP Leader Wab Kinew refused to support the cuts or commit to keeping them if the NDP is elected, saying Tuesday his party will reveal its own fiscal plan when its election platform is released, closer to the election.
"The concern that I have is that we just can't trust the PCs," he said when asked if losing up to $500 million in potential revenue through the promised tax changes was a concern.
The plan is "election year desperation," Kinew said.
Changes to the basic personal amount and tax bracket thresholds announced in the province's $22-billion budget, which was released at the legislature on Tuesday, mean Manitobans could save as much as $1,400 on personal income tax.
The change to the basic personal income tax exemption, coming into effect this year, means Manitobans will not pay taxes on the first $15,000 they make — up from the current exemption of just over $10,000.
Once implemented for a full year, that change would remove $326 million annually in tax revenue.
Manitoba Liberal Leader Dougald Lamont blasted the cuts, saying they aren't "fiscally responsible."
"They are giving away hundreds and hundreds of millions of dollars in unfunded tax cuts," he said.
The budget pegs the province's deficit at $363 million, meaning without the new tax measures, the government could have balanced the budget.
"This is not progressive and it is certainly not fiscally conservative," said Lamont.
More tax changes planned for 2024
While the changes to the basic personal amount take effect this year if the budget passes by June 1, others won't come into effect until 2024 — months after the election.
That includes a change to the payroll tax planned for 2024 that would mean about 900 employers will pay less next year, with 150 of them exempt from paying the taxes altogether, removing a further $9 million from provincial revenue.
The Progressive Conservative government has also promised changes to income tax bracket thresholds for next year that would remove a further $160 million from government coffers.
A lobbyist for the Canadian Taxpayers Federation says that timing is dangerous, given the upcoming election. Gage Haubrich, the Prairie director for the federation, said he'd rather see all of the promised tax measures implemented by June 1.
"Elections can change things and that's why it is important to get things done as soon as possible," said Haubrich.
During a pre-budget briefing early Tuesday afternoon, Finance Minister Cliff Cullen called the tax changes "historic," but said delaying the payroll and threshold changes until 2024 is about "finding a balance."
"We only have so much money to deal with," said Cullen, who has already announced he does not plan to run again in the coming election.
"It is important that we give Manitobans tax breaks," said Cullen when asked why his government didn't use the money to balance the budget.
During the pre-budget briefing, Premier Heather Stefanson said she is "confident this is the budget Manitobans want."
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