Dear Minister of Finance Ė Manitoba
(this article was submitted to the Dawson Trail Dispatch for the June 2016 edition)
I know you are relatively new to your position, Mr Cameron Friesen, but there are a few items related to our Personal Income Taxes that make me angry every year and have been for several years. I have contacted the previous Ministers of Finance regarding these issues, but nothing was done with my suggestions, so I hope you will listen and give these ideas some serious consideration.
The first concern I have is the taxes paid by low income Manitobans; especially the working poor and the low income seniors. Hard to believe someone with income under $20,000 is paying provincial taxes.
The working poor start paying taxes at $9,135. Why on earth would you start taxing someone with such a low income? Please look at how the province of BC treats its low income residents. The BC Tax Reduction within their provincial personal income tax calculation ensures those with incomes under $19,000 pay no provincial taxes. Time to look at this and put more cash in the pockets of low income Manitobans without affecting the basic personal credit; the rest of us can continue to pay provincial taxes starting at $9,135 until we can afford to increase the basic credit.
Our poorest seniors start paying provincial taxes at $12,863 (includes the $3,728 age credit). Can you explain to me why a senior with income under $19,000 should be paying provincial taxes? Federal taxes start at $18,599 for our senior taxpayers.
Bracket Creep has been around since 2003. Manitoba has not indexed its tax brackets for inflation. This means as incomes rise every year to offset the effects of inflation Manitobans are quietly (and without a formal announcement) moved into higher tax brackets. Over the past 13 years, Manitobans have paid thousands of dollars more in their individual personal income taxes than they should have.
Consider someone at minimum wage. Even though minimum wage has increased over the years, more cash goes towards Manitoba personal income taxes every year. Since 2003, someone earning minimum wage has paid about $600+ more in taxes. Does that seem fair?!
This policy is just one of many ways in which Manitoba has an uncompetitive personal income tax system. In fact Manitoba has the highest income tax rates in Western Canada and the lowest basic personal exemption (now at $9,134). The federal credit as a comparison is now at $11,474 for 2016.
The Seniors School Tax Rebate was introduced for 2014 ($235) and increased in 2015 to $470. This rebate helped many seniors (including those with high incomes), but did nothing for the low income seniors. They were getting this credit through their personal income taxes (Manitoba Provincial Credits). So all the previous government did was make them apply for it ahead of time, but it decreased their tax refund by the same amount. This credit helped those seniors with higher incomes. I recommend you cap the credit at the current $470 (do not increase it) and review it to determine if itís the right thing to do. (Seniors with higher incomes do not need this credit!)
On another issue, did you know that some provincial credits can only be adjusted going back three years? The credits in question include the Manitoba Primary Caregiver Tax Credit and the Education Property Tax Credit.
By not allowing these credits to be claimed after a three year period, you are penalizing the ones who didnít know about it. Unfortunately with the way our tax system is, you need to know what you may be eligible for. (You donít know what you donít know). If you are too late, too bad. Please change the tax regulations and allow individuals to claim credits they are entitled too, but didnít know they could get it.
The Manitoba Primary Caregiver Tax Credit became available in 2009 and still I meet individuals that donít know what it is or that they are or were eligible to apply and receive it. This Credit financially helps those in the community that provide important care to our seniors and those with disabilities, often family members or neighbours or good friends. These caring people relieve the strain on the homecare employees.
Since 2009, these caregivers were eligible to receive a credit up to $1,400 per year (was $1,020 and $1,275 previously). But if you apply now, we can only go back three years, even if these individuals have been providing care for several years. And this credit is refundable. That means even if you do not pay any taxes, you can get the tax credit paid to you.
The other Provincial credit that has a three year time limit is the Education Property Tax Credit. Most of us get the $700 credit on our property tax bill. But some people either donít have it on their property taxes (recently moved to the new property or multiple homes on the title) or they are renting. If you are late filing your taxes and need to go back more than three years, you are out of luck in getting this credit you are entitled to. Or if you didnít know about it and didnít claim it, we cannot get it back if itís more than three years ago that you didnít claim it.
There are other credits that allow us to go back up to 10 years (disability tax credit and medical, for example), so why not these as well?
During the election campaign, Ambulance fees were a big topic. An easy solution to high cost problem is to include Ambulance fees under the Pharmacare umbrella. This way those with lower incomes will have their fees covered. And those with higher incomes still pay (or have it paid by their private or employer sponsored health plans).
Mr Cameron Friesen, Minister of Finance for Manitoba, I know you have a lot on your plate right now and I donít expect changes immediately, but I want to make sure you understand our personal income taxes seem unfair to the people who need help the most. The low income tax payers and those who are unaware of available provincial credits deserve better.
I will share this info with Bob Lagasse, the new MLA for Dawson Trail; the area that I live in and many of my 2,000+ tax clients live in too.
I hope my faithful readers will take this column and give it to their local MLA to ask for some tax relief for the Manitobans with the lowest of incomes.
Anni Markmann Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact her at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or Info@SteAnneTaxService.ca.