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Getting past the tax cut spin

The Manitoba budget needs a bottom-up approach

Canadian PoliticsEconomic Crisis

Manitoba New Democrats have bought into the regressive thinking that the solution to the rising cost of living is to cut taxes, argues former NDP MLA Marianne Cerilli. Photo by John Woods/CP.

There’s a meme going around in activist circles that Manitoba has gone from a Progressive Conservative government to a conservative progressive government. The billboards around the province promoting the gas tax cut and other tax reductions as significant cost savings are evidence of this. Government representatives and budget documents talk about parents being able to say yes to their kids and get them to hockey while hanging onto up to $5,000 in tax savings. It seems the Manitoba NDP has bought into the regressive thinking that the solution to the rising cost of living is to cut taxes.

The budget documents making the case for extending the gas tax cut feature the example of a Ford F-150 Raptor 4x4 driven 25,000 kilometres per year at a saving of $510. The billboards don’t mention the fact that the gas tax cut is costing the government $163 million in revenue, money that could go a long way to raising wages for childcare workers or raising rates for kids in Child and Family Services (CFS) foster or kinship placements, which have not gone up in 13 years. To use that $163 million to “neutralize the Conservatives” and take the wind out of their sails in the midst of their leadership election can be seen as unethical or just cynical politics. Meanwhile, this politics of spin and psychological mind games are deepening poverty and inequity.

Spinning the public: the tax-cut shell game

There is no cost-benefit analysis on the proposed tax cuts to prove they are a better value than more trauma treatment for people coping with gender-based violence, or more childcare spaces, or more public housing, or moving to a basic income system. There is no analysis of the costs of these tax cuts: who is left out and what we lose overall. Somebody who does not have a political understanding of the interests being served in the private and public sectors will see only the short-term tax breaks, not the long-term erosion of public assets. But the public might do well to ask if getting a tax cut so that grocery chains and banks can jack up profits is the best use of public funds. The tax-cut shell game can be exposed as mostly spin, with hopeful projections for increases in economic growth.

In their guide Cities Building Community Wealth, Marjorie Kelly and Sarah McKinley of the Democracy Collaborative summarize two approaches to economic development, the first understood as bottom-up, the second as top-down:

The top-down approach is characterized by trickle-down economics and the creation of a low-tax environment, with little or no regulation of the private sector, to attract private investment, leading to less government regulation and oversight, and smaller government with fewer services and programs. What is often missing from this frame of reference is an intersectional gendered lens, lacking which it neglects to consider who will care for children, the elderly, and others who are not employed, the assumption being that this is women’s work, carried out in the private realm of the home.

A report titled “The Cost of Poverty in Manitoba,” published earlier this year by the Manitoba chapter of the Canadian Centre for Policy Alternatives (CCPA), sums it up: “It is well-documented that the ‘trickle-down’ theory of economic development does not work…. Cutting taxes like the Basic Personal Exemption changes in [Manitoba’s] Budget 2022 only remits $74 a year to the low-income earners who make enough to pay taxes, and the highest-income earners receive $1,322 in taxes back.” The money saved on taxes is gendered as well. In the CCPA-MB report, authors Molly McCracken and Charles Plante found that the top 10 percent of male earners received 20 percent of the tax savings, equivalent to the amount saved by the lowest 60 percent of female earners. These regressive changes cost the Manitoba government $326 million in lost revenue, an amount that might otherwise have been spent on anti-poverty initiatives and thereby reduced the cost to the province of poverty, estimated at $2.5 billion.

New budget metrics: Mapping the levers of power

The Reweaving Support – Collaboration for Systems Change project has been studying Manitoba’s social safety net and budget through an intersectional lens. The project’s goals are to engage networks of people working on issues of poverty, housing, gender-based violence, child development, and youth services to examine the current social safety net systems and then reimagine those systems. It only makes sense that the social safety net should be trauma informed, decolonized, and based upon evidence, healthy public policy, and the social determinants of health. Implementing a collaborative approach would involve linking community cooperation to government staff through joint working groups on each of the five areas of the project mentioned above.

The project uses a tool called a Change Matrix to map and explore the existing systems in seven areas or levers of power: the legislative and policy framework; the budget and fiscal framework; staffing; programs, service design, and delivery; public education and awareness building; governance models; and public engagement tools and processes. The results of this work can be found on the Reweaving Support website.

The Reweaving Support project also looks at the Manitoba budget through an intersectional lens to identify how funds for improving social equity might responsibly be sourced to improve social equity on both the revenue and spending sides of the budget. The Statistics Canada graphic below shows economic growth indicators—indicators that Manitoba Finance continues to use—which measure progress exclusively as economic growth. The trouble with this, however, is that we cannot improve what we refuse to account for and measure.

Where are the indicators for equity, for reducing poverty, for cutting carbon emissions, and for child development and school readiness (such as the Early Development Instrument)? Or for measuring literacy (since there is now a new literacy strategy, instead of increased EIA or welfare rates) or for tracking the gender wage gap as an indicator of economic development? We know that economic growth is neither sustainable nor equitably distributed. So why is growth the only indicator we are using in the budget? This is 2024. We have had sustainable development indicators for decades. We teach sustainable development in schools now and we read about it in government documents—but until sustainability and equity indicators are integrated into fiscal policy and the budget, we will remain stuck with deepening poverty and widening inequity on a dying planet.

Looking beyond economic growth

Reweaving Support has authored a forthcoming budget paper, “Operationalizing Compassion and Implementing Social Justice,” which summarizes budget problems, solutions, and impacts, both on the revenue and spending sides, as well as five areas of the social safety net to be addressed: CFS, housing, income, childcare, and gender-based violence.

In its second phase, Reweaving Support will organize working groups to work collaboratively with government for an intersectional and trauma-informed social safety net to reverse austerity measures and tax cuts. Our goals will include: repealing sections of the Balanced Budget Act of 1995, which made fiscal conservatism the law in Manitoba; initiating an intersectional participatory budget process, by 2026-27; and ensuring that indicators for just transition and GHG emissions, gender equity, child development, and other social returns on investment are measured by the government and implemented in the budget. We know what to do to implement social justice and it begins with a more collaborative approach, particularly an intersectional, participatory budget, to support a compassionate and trauma-informed social safety net.

Marianne Cerilli is the lead organizer and capacity builder with the project Reweaving Support – Collaboration for Systems Change. She is a former member of Manitoba’s legislative assembly, a health educator, and a community development and CED aficionado.

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