New working group will review Manitoba's tax systems with aim to make economy more competitive: province

The province says a newly created working group and advisory committee will focus on reviewing Manitoba's current tax framework and the province's economic competitiveness.

Premier Heather Stefanson said Manitoba isn't as tax-friendly as it needs to be — a problem exacerbated by pandemic-related forces impacting the economy — and has fallen behind other provinces.

"As we slide back, that prevents us from growing our economy here because businesses are choosing to go elsewhere," Stefanson said at a news conference Wednesday. "The way we will improve education and social services, health care, is by growing our economy."

Stefanson announced the formation of both an economic advisory council on competitiveness and a "tax competitiveness" working group, made up of leaders from the local business community who will advise government.

The advisory council will solicit ideas from the business community and report back to the economic development cabinet committee. Curt Vossen, president and CEO of Richardson International, will serve as co-chair of that group.

The council on competitiveness will also include:

• Bram Strain, president and CEO, Business Council of Manitoba.
• Daniel Friedman, president and CEO, Pavilion Financial Corp.
• Dan McConnell, CEO, North West Company.
• Jamie Brown, CEO and executive producer, Frantic Films.
• Darryl Levy, president, and CEO, Wynward Insurance Group.
• Chuck Davidson, president and CEO, Manitoba Chambers of Commerce.
• Tanya LaBuick, board president, Brandon Chamber of Commerce.
• Mark Jones, chair, Winnipeg Chamber of Commerce.
• Dayna Spiring, president and CEO, Economic Development Winnipeg.
• John Heimbecker, vice-president, Parrish and Heimbecker.
• A representative from the Indigenous Chamber of Commerce (yet to be named).

Strain said Manitoba has traditionally relied on certain advantages, like its location, diverse economy, hydroelectric sector and low cost of living.

"That's no longer enough," he said at the news conference.

"We cannot rely on these alone. We must work harder to improve our competitiveness, to attract new enterprises and to create the conditions for new startups and to promote the growth of local companies."

Tax review working group

Finance Minister Cameron Friesen will serve as co-chair of the tax competitiveness working group, made up of the following tax and other experts:

• Kevin Ploegman, partner with Fort Group and a chartered professional accountant.
• Mark Jones, chair of Winnipeg Chamber of Commerce.
• Al Babiuk, CEO of Loewen.
• Trevor Sprague, partner with MNP.
• Jessica Dumas, president of the Jessica Dumas Institute of Diversity and Leadership.
• Ryan Palmer, a partner with KPMG.
• Dan Kelly, president and CEO of the Canadian Federation of Independent Business or Kathleen Cook, CFIB provincial director for Manitoba, Saskatchewan and the North.

Friesen said the current tax systems in Manitoba — including those for personal income, land transfer, sales and payroll — will be reviewed by the taxation working group. It focus will be on how to modernize and change the current frameworks — namely, to reduce taxes.

Friesen said the province has already reduced the provincial sales tax, introduced indexing for the basic personal exemption for income tax and started phasing out the education property tax.

But more needs to be done to make the system competitive with other jurisdictions, he said.

The premier also pointed to the recent board announcements for a $50-million venture capital fund, which was first announced last year, as another step toward supporting Manitoba businesses.

Manitoba employment numbers fell by 10,000, or 1.5 per cent, in August after holding steady in the four months prior, according to a Statistics Canada report out last month. Unemployment rose to 5.3 per cent.

The vice-president of policy and government relations with the Manitoba Chambers of Commerce said Manitoba must create conditions more conducive to investment if it hopes to compete with other provinces that "are outplaying us."

"When we poll business leaders, they highlight the payroll tax as one of the key measures the province could undertake to address competitiveness," said Elisabeth Saftiuk.

"We commend this government on having raised the threshold, but it remains a disincentive to growth and we welcome further analysis."

She suggested too many recent post-secondary graduates are leaving the province for jurisdictions where they can keep a larger share of their earnings. She pointed to Manitoba's basic personal income tax exemption — which is about $6,000 less than Saskatchewan's and third-lowest in the country — as a factor.

Minister of Economic Development Cliff Cullen also revealed the province will roll out a system to help some small businesses absorb costs associated with the latest minimum wage increase.

It went to $13.50 this month, up from $11.95, which remains the second-lowest in Canada.

The government is earmarking $6 million for businesses, non-profits and charities that employ up to 20 workers to apply for a subsidy of 50 cents per hour per worker employed between Oct. 1 and March 31, 2023.

Cullen said there are an estimated 15,000 employees making minimum wage in Manitoba right now, and about three-quarters of businesses have 20 or fewer staff.

Stefanson was also asked about the possibility of renewed COVID-19 restrictions, following a suggestion earlier this week from federal Chief Public Health Officer Dr. Theresa Tam that it may be prudent to bring in some measures to support the system this fall in the event of a COVID-19 surge.

Stefanson was asked twice whether Manitoba would consider imposing public health restrictions again if COVID-19 overburdens the health-care system once more.

She refused to respond directly and then left the podium.