Manitoba's 2021 budget includes new tax on streaming sites, cuts to property tax
Manitoba’s Budget 2021 includes cuts to the Education Property Tax, a refund for teachers paying for supplies out of pocket, and new sales tax on streaming sites like Netflix and Spotify.
The province tabled its provincial 2021-22 budget on Wednesday at the Manitoba Legislature, which outlines $19.4 billion in total spending.
The province is expecting a deficit of $1.597 billion for 2021-22. While the deficit is down from the forecast for 2021, the province said it has been exacerbated by the COVID-19 pandemic.
The province said it plans to eliminate the deficit over eight years.
"It's going to take time to clean up from this pandemic mess, and we are facing that today with this budget," Manitoba Premier Brian Pallister said on Wednesday.
EDUCATION PROPERTY TAX CUT, ADDITION OF TEACHER EXPENSE REFUND
This year’s budget allocates close to $3 billion to education - the province said this is the highest education budget in Manitoba’s history.
The budget includes the long-promised first step to phase out the education taxes on property. The budget said $248 million in Education Property Tax Rebates will be provided to about 658,000 properties in 2021.
Residential and farm properties will see a 25 per cent rebate of the school division special levy and the community revitalization levy payable in 2021, as well as another 25 per cent rebate in 2022.
Owners of other properties - including commercial, industrial, railway, institutional, pipelines, and designated recreational properties - will get a 10 per cent rebate in 2021.
Manitoba Finance Minister Scott Fielding said homeowners can expect an average rebate of more than $800 over the two years.
"It is money that will go back out into the economy and help us to recover from COVID," Pallister said.
Pallister said the province has previously promised to eliminate the Education Property Tax over 10 years. He said he would not make a commitment as to when the rest of the tax will be cut.
The phasing out of the education property tax will see a decrease of $192 million in 2021/22.
To offset the education property tax reduction’s impact on school divisions, the province said it would be putting $1.6 billion over four years for education funding, with a $23 million grant to school divisions this year – equal to a two-per-cent property tax increase.
Along with this, the province is introducing a maximum of $150 school supply refund for childcare educators and K-12 teachers who purchased the supplies out of pocket.
The province said this new ‘Teaching Expense Tax Credit’ will allow these teachers and educators to claim a 15 per cent refund for up to $1,000 spent on school supplies not covered by the employer.
The province said $4 million will also be used for a virtual learning strategy and program for Manitoba students’ online remote learning, regardless of technology options.
Tuition fees are forecasted to be $18 million below the budget. The province said this is mainly because of a drop in international student enrollment due to COVID-19.
It said university tuition rate increases will be capped at 3.75 per cent and $250 per college program this academic year.
EDUCATION TAX CUT COMING AT A COST, OPPOSITION SAYS
Manitoba NDP Leader Wab Kinew said the budget tabled on Wednesday underfunds the education system, and said the cut on the education property tax is coming at a cost.
"I'm open-minded towards looking at different ways to fund the education system, but that money has to come from somewhere," Kinew said. "Where is it coming from? It's coming from underfunding seniors care, it's coming from cuts to real dollars to the health care system, and it comes from underfunding the education system."
It is a concern shared by the Manitoba School Board Association.
"Where the significant concern comes in is the fact that at no point in today's announcement was there any detail provided about where the money will be replaced from," said Alan Campbell, president of the association.
Liberal Leader Dougald Lamont criticized the Manitoba tax cut, saying it will benefit people at the top.
"It is colossally unfair," he said. "It is overwhelmingly geared to helping people—some of whom are already doing pretty well—who don't need help, while completely denying help for people who really need it."
PST ON STREAMING, ONLINE SELLERS, ONLINE HOTEL BOOKINGS
While the province is moving forward with its promise to remove the sales tax (currently set at seven per cent in Manitoba) on personal services including hair services and salons, and tattoos as of December - it is adding the tax to some other online services.
Among the tax changes coming to Manitobans in 2021 is the introduction of a provincial retail sales tax for streaming services, online marketplaces, and online accommodation platforms as of Dec. 1, 2021.
The province said the retail sales tax will apply to audio and video streaming services including Netflix and Spotify. PST is currently collected on streaming services provided by CraveTV in Manitoba. The provincial budget said it expects to collect $14 million from this tax annually.
Online marketplaces - which include businesses that sell goods from third parties online - will also see the introduction of the PST, which is expected to bring in $10 million annually.
The province said some sellers, such as Amazon and Best Buy Canada, may already be collecting the sales tax on the sale of their own goods but are currently not required to collect sales tax on the sale of goods by third parties.
The province said this tax will not be included on second-hand sale sites such as Kijiji and Facebook Marketplace.
The province said the PST will also be introduced for online platforms used to book hotel and Airbnb stays in Manitoba. It is expected to bring in $2.5 million annually.
The province is projecting a total retail sales tax increase of $208 million.
While Pallister acknowledges these taxes will make life more expensive for some Manitobans, he said it will also make the tax structure fairer.
"The present structure was a free ride for some and an additional unfair disadvantage to others," he said.
These sales tax additions come as the provincial 2021 budget reduces vehicle registration fees by another 10 per cent in July, in addition to a 10 per cent reduction made last year.
SMALL BUSINESS HELP, RENT FREEZE OVER TWO YEARS FOR PANDEMIC RECOVERY
As it announced early this week, the province said it would be putting $1.2 billion in COVID-19 costs and contingency funds.
But Michelle Gawronsky, the president of the Manitoba Government and General Employees' Union, said more is needed.
"Instead of making urgent investments needed to address the ongoing COVID 19 pandemic, including speeding up the vaccination rollout plan and stimulating our struggling economy, they are pushing forward with unaffordable tax cuts," Gawronsky said in a statement.
To help renters get through the pandemic, the province said it plans to freeze the annual rent control guidelines through 2022 and 2023, following a 1.6 per cent hike this year.
Along with the freeze, Fielding said the province is putting another $22 million into the Rent Assist program.
Fielding said the province will also be freezing childcare fees for three years.
The budget includes a further lowering of the payroll taxes for some small businesses. The Finance Minister said this is the second year Manitoba is doing this.
The province said it plans to put $62 million towards new COVID-19 recovery job creation and workforce training, along with a minimum of $25 million for youth and student job hiring.
MORE FROM THE 2021 BUDGET
Here are some of the other items included in Manitoba’s 2021 budget:
- $25 million trust to redevelop the Downtown Winnipeg Hudson’s Bay building;
- $2.9 million to address the backlog in the court system caused by COVID-19;
- The creation of a new Manitoba Criminal Intelligence Centre;
- The creation of a new program to cover glucose monitoring devices costs for eligible children and youth under the age of 25, and increasing the age limit the insulin pump program from 18 to 25;
- $292 million for health-care facilities infrastructure which will allow the construction on the new St. Boniface Emergency Department to begin; and
- $9.3 million to add 120 beds to personal care homes in Steinbach and Carman.
You can read Manitoba’s full 2021 Budget here:
This is a developing story. More to come.