The New Year began with the provincial NDP government firing off a News Release to Manitoba media trumpeting tax cuts that came into effect on January 1st. For those Manitobans who just saw the headline of this news story they may be wondering how much more money they will have in 2009 as a result of these tax cuts.
As it turns out, the amount Manitobans will save on each paycheque may not even get them a cup of coffee at their favorite coffee shop.
The biggest change to the personal tax structure by the NDP this year will be the reduction of the tax level on the lowest personal income tax bracket from 10.9% to 10.8%. This means if you earn less than $31,000 per year you will save about $1.19 per paycheque and if you earn more than $31,000 you will save about 76 cents per pay cheque. Don’t rush out and spend it all in one place.
The very small reduction in taxes offered by the NDP government only looks smaller when compared to our neighbors in Saskatchewan. As of January 1st, the government of Saskatchewan increased the personal tax exemption amount to $12,945. That means that the first $12,945 that a resident of Saskatchewan earns is tax free. How does that compare to Manitoba? In our province, under the NDP government, the personal tax exemption amount is only $8,034.
As a result, a married couple in Saskatchewan making an average household income would pay $1,070 less in taxes than the same couple in Manitoba.
Making matters even worse, the NDP government has refused to follow the lead of other provinces and adjust the taxable income brackets to inflation. That means that each and every year more people move into a higher tax bracket even though their real earnings are no greater due to the increased cost of goods because of inflation. This is called “bracket creep” and it’s a sneaky way for the NDP government to collect more taxes without most people knowing.
In the challenging economic times that Canada and the world are facing, government needs to look closely at how best to stimulate the economy to reduce the impact of an economic slowdown. Reducing taxes can have some positive effect, especially the reduction of personal income taxes. Reducing personal income taxes by mere pennies as the NDP government has done while on the other hand taking more taxes through “bracket creep” is deceptive and will do nothing to help boost the economy.
Saskatchewan has opted to offer meaningful tax relief to its residents in the hopes that it will positively impact their provincial economy. Manitobans are left to wonder where they should spend those extra pennies the NDP government has so “generously” given back.
