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August, 2012

$180 Million Tax Increases

In April, the Manitoba Government announced its new budget including some tax increases to the usual items and some brand new taxes.

The fuel tax will increase 2.5 cents per litre to 14 cents per litre. At least it’s a flat tax regardless of how much gas is per litre (unlike GST that increases as the price of gas goes up).

And the smokers saw an increase of 2.5 cents per cigarette to a total of 25 cents per cigarette. Keep that in mind next time you light up!

But the government also announced some new taxes. Now that it has been a few months and now we are seeing the tax increases, it’s time to make sure you know about them and I’ll provide some opinion on them.

The first tax came in effect July 1. It’s the tax on some personal services that affect mostly women. That’s why some have commented it’s a tax on Women!

The government will charge the PST on the following services as of July 1: spa treatments, pedicures, manicures and facials, haircuts, and hairstyling, tattooing and piercings. Haircuts costing less than $50 will be exempt.

When you look at this list of services, you can see that it hits the women the most.  Fortunately I don’t spend much on my hair cuts and I’m not colouring it (No grey hairs yet!).

Also subject to the PST will be purchases of property and group life insurance, trip cancellation insurance, baggage insurance and land titles insurance. The changes do not affect or apply to individual life, disability or critical illness insurance policies.

I believe the provincial sales tax on property insurance is unfair. You can have two different families living in similar homes with similar costs for home insurance, but very different incomes. It’s what we call a regressive tax – everyone taxed the same regardless of income level. So when you go to renew your house or tenant insurance, it will have increased by at least 7%. Don’t get mad at the insurance company or broker, they are just adding the tax as they are required to do.

And now the businesses that pay property taxes – how do you think they will handle the 7% increase? Of course they will need to increase their revenue to cover it – they will increase their prices that you and I will pay.

The Government of Manitoba should have increased the provincial income taxes on the higher income individuals to collect $180 million instead of all these regressive taxes that will hurt the lower income families the most. Fuel taxes and house insurance taxes – we all need to pay them, but the higher income families will feel it less and the lower income families will notice it the most.

Oh, you wanted some good news? The basic personal amount is going up $250 from $8,384 to $8,630 (that was announced last year). We are still way behind. The federal basic amount is at $10,822. So your income between $8,630 to $10,822 gets taxed by the Province (at 10.8%), but not by the Feds. Still we have the lowest basic personal amount in the country.

Everyone saves some taxes regardless of income level. The government should have provided an outright tax break to the lowest income earners earning under say $20,000. Why should they be paying provincial taxes? Our lowest income individuals get taxed the highest in the country. Does that sound like a government concerned about “the little guy”?

And the minimum wage is going up again in the fall to $10.25. Now this is not a tax, but of that $0.25 increase those receiving minimum wage may get, how much do you think they actually see after the provincial tax, federal tax, CPP and EI are taken off? All it does is cost the small businesses more in their payroll taxes (including the employer CPP and EI). Again, does this really help the lower income earner? It does put more taxes in the provincial tax pocket! If the government wants to help those earning minimum wage, stop taxing them!

There was one more tax increase – another $35 increase in registration fee on vehicles. This tax and the increased tax on fuel are supposedly going straight to roads. Let’s see what they do.

Anni Markmann is a tax professional and a Certified Financial Planner working, living, and volunteering in our community. Contact Anni at anni@steannetaxservice.ca or 422-6631 or 36 Dawson Rd in Ste Anne.





 
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36 Dawson Road, Box 1072, Ste Anne, MB, R5H 1C1
Tel: 204 - 422 - 6631
2017