Manitobans are hearing a lot these days about the Manitoba Advantage and how affordable it is to live in the province.
Unfortunately, the facts from the 2015 budget don’t match the political spin.
Despite the rhetoric, when it comes to provincially controlled taxes and utility rates, Manitobans actually face a colossal disadvantage compared to our main competitor and closest neighbour, Saskatchewan.
A dual-earner family of five making $75,000 will pay more than $10,200 to the Manitoba government this year in provincial taxes, Manitoba Hydro bills and MPI insurance premiums.
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In Saskatchewan, that same family will send less than $7,000 to the provincial government and its crown-owned utilities.
That’s a whopping difference of more than $3,250.
The trend line on this figure is even more depressing. Just 10 years ago, it was actually $50 cheaper to live in Manitoba than Saskatchewan for our example family. Since 2006, the affordability gap between Manitoba and Saskatchewan has grown wider almost every year.
To be fair, Manitoba families will pay $732 less to provincially owned utility companies than their Sask-atchewan counterparts this year. Unfortunately, even the Manitoba utility advantage is shrinking, thanks to higher hydro rates and Autopac premium hikes.
But that’s not telling the whole story.
The problem with focusing solely on utility affordability is that these costs account for just a fraction of the money families pay to the provincial government.
Over the last 10 years, utility fees accounted for just 44 percent of the government take from our example Manitoba family. This is far lower than in Saskatchewan, where utility charges account for 64 percent of the total tax take. If anyone should be worried about utility costs, it’s Sask-atchewan residents.
Taxes are the other big piece of the pie.
If we are to have an honest conversation about the affordability of living in Manitoba, we cannot just focus on provincial utilities. We also need to talk about the provincial tax system, which charges Manitoba families $4,017 more than in Saskatchewan.
Particularly, we need to compare the two biggest provincial tax components that affect families: personal income taxes and the provincial sales tax.
When it comes to personal income taxes, Manitoba charges our families earlier and at much higher rates than almost any other province. This explains why our example family pays more than eight times more in income taxes in Manitoba than Sask-atchewan, which is a difference of $3,311. In 2006, the difference was only $632.
The single biggest cause for the disparity is the difference in the basic personal amount threshold, which is the amount you can earn before having to pay income tax.
Manitoba’s basic personal amount is set at $9,134 per person, while Saskatchewan has set its individual rate at $15,639, which is a $6,500 difference. For a dual-income family, this means an additional annual tax charge of more than $1,400.
The growing PST gap paints the same picture as income taxes.
Manitoba has raised the PST rate to eight percent since the 2006 provincial budget and expanded it to capture more items that families depend on, such as home property insurance.
Meanwhile, Saskatchewan has reduced its PST from seven to five percent to leave more money in families’ pockets.
The result? Manitoba families now pay twice as much PST as families in Saskatchewan do. In 2006, these costs were basically equal.
The sobering reality is that just 10 years ago, Manitoba families lived in a province that was competitive when it came to government affordability. Unfortunately, this advantage was frittered away by the provincial government with virtually nothing to show for it.
Manitoba’s infrastructure continues to crumble, and the province remains at the bottom of the barrel when it comes to many key health and education indicators.
The provincial government is correct to acknowledge that Manitoba needs to be an affordable place for families to live and grow.
However, looking only at provincial utility costs is misleading and doesn’t tell the whole story about our current uncompetitive condition.
Manitoba families need the provincial government to provide them with a competitive tax structure as well as reasonable utility rates.
The first step toward achieving this is to stop the political spin and face the facts: the Manitoba Advantage is about as real as Manipogo.
Elliot Sims is the Manitoba director of provincial affairs with the Canadian Federation of Independent Business.
