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Delivering Community Power CUPW 2022-2023

Tax cuts are forever

The Manitoba NDP’s promise to not raise taxes will delay the progress we desperately need

Canadian PoliticsEconomic CrisisEnvironment

As Marianne Cerilli argues, the NDP has become progressive on identity and social issues, and conservative on economic and fiscal policy. Photo by Bryan Scott/Flickr.

The 2023 Manitoba election will probably be remembered most for the transphobic parents’ rights ads and the racist billboards placed by the incumbent Progressive Conservatives in support of their decision not to search a landfill for the remains of Indigenous women left there by a serial killer. Both were failed attempts to stir up fears about race and gender into votes for Heather Stefanson.

But the election should also be remembered as a contest of tax cuts, with the New Democrats and Conservatives trying to outdo one another with the most outlandish proposals to lower taxation—or buy votes with taxpayer money.

The PC’s election platform promised over $1.2 billion in tax cuts. According to the Manitoba office of the Canadian Centre for Policy Alternatives, these included:

  • Halving the tax rate from to 5.4 percent from 10.8 percent on Manitoba’s lowest income tax bracket, which could cost the province up to $981 million by 2027.
  • Eliminating the Health and Post-Secondary Education Tax Levy over eight years, which would remove at least $440 million of revenue from provincial coffers by 2031.
  • Eliminating the land-transfer tax for first-time homebuyers ($40 million).
  • Introducing smaller tax cuts like removing the PST from garden plants and trees (not costed).

The PC “plan” included almost $5 in new spending for every $1 in tax cuts, tax credits and the one-year Manitoba Hydro rate freeze. Meanwhile, the NDP tax cut promises included:

  • A gas tax cut of 14-cents-per-litre, which will amount to $330 million a year of lost revenue but only about $4 for a fill-up on an average gasoline-powered vehicle driven 15,000 kilometres a year. This would amount to just $210 in annual savings for drivers.
  • Keeping the Conservative tax cuts in place and promising not to raise taxes (under the PCs, the province cut taxes representing $1.6 billion of revenue lost annually since 2016).
  • Keeping the education property tax rebate, which was part of the fight on Bill 64 to wipe out school boards and local property taxes.
  • Removing the PST from the construction of new rental housing.
  • Balancing the budget in the first term.
  • Promising to never raise the PST.
  • Introducing a number of tax credits which are also hits to revenue but carry some social or health benefit (like the rent rebate).

Since the election, the new NDP government headed by Wab Kinew also declared its support to petition the federal government to remove the carbon tax from natural gas after Ottawa announced it would exempt home heating oil from the carbon tax for Maritime provinces. The revenue cost of this move has not been calculated, but after strong criticism Premier Kinew left his name off the premiers’ ‘axe-the-tax’ letter to Prime Minister Justin Trudeau.

Cutting taxes has become a key part of fiscal conservative politics and dates back to the Reagan era when the term “tax relief” was popularized as a way of signalling that taxes were an affliction that “rate payers” (not citizens) needed “tax breaks” from. Framing taxes in this way was a key ideological component of so-called trickle-down economics and of the the blackmail used by corporations to hold the public and governments hostage with threats that without a competitive tax environment the private sector would take its jobs elsewhere. Tax cuts have been part of the narrative by corporations and the political right to convince workers and the voting public that cost of living challenges are due to high taxation and big government rather than low wages, price gouging and obscene corporate profits.

The NDP seems to have adopted this fiscal conservative narrative, and it is concerning for many that they would promise such regressive and misguided tax cuts. They know, for example, that the gas tax cut is both bad economic and bad environmental policy as it rewards people with the wealth to drive more, while ignoring the impacts of greenhouse gas emissions from personal transportation. They also know it is classist policy since it redistributes wealth in the wrong direction, subsidizing vehicle reliance at the expense of funds for public transit and supports for Manitobans struggling on low incomes. They did it anyway.

Photo courtesy Wab Kinew/X

The Kinew NDP campaign signalled early on that it was heading in this direction with endorsements from former Liberal cabinet minister Lloyd Axworthy and fiscally conservative former Premier Gary Doer. This has led some to quip that Manitoba now has a Progressive Conservative Party and a conservative progressive party, as the NDP has become progressive on identity and social issues, and conservative on economic and fiscal policy.

Let’s not forget the Doer government cut both the small business as well as the general corporation income tax rate which, like the 2023 gas tax cut, was not even proposed by the Conservatives. Premier Doer, after initially supporting balanced budgets, but condemning the 1995 Balanced Budget, Debt Repayment and Taxpayer Protection Act of his predecessor Gary Filmon, eventually promised to keep the legislation in the 1999 election. Instead of exposing that the balanced budget legislation was a gimmick and a trap by the Conservatives—as it required a referendum to raise taxes—it trapped the successor government of Greg Selinger by enshrining fiscal conservatism as law in Manitoba. The Kinew NDP promise to never raise the PST seems like a nod to the “Gang of Five” cabinet ministers who attempted to oust Selinger in 2014.

An NDP government could see itself as an equalizer and use all the tools of a budget to redistribute wealth, create more equity and social inclusion, and promote a just transition. This would mean adopting full cost accounting into the budget as well as social return on investment practices. Balancing the budget is then seen as more than elementary math of simply making the revenue and expenditures add up. After all, the budget is an economic plan and system of fiscal feedback loops that can create more equity and security, or like a leaky bucket, less equity and social security as money is thrown away, rather than put to work. Tax cuts are big budget leaks, that keep leaking, forever.

Ultimately, although the NDP tax cuts were not as reckless as the PC tax cuts, political relativism is still a race to the bottom, as tax cuts are forever. Government never gets that money back, even if it raises taxes.

Some other ideas for progressive economic policy that will address the climate and equity crisis include: creating another tax bracket for high income earners, increasing the corporate tax rate, and reversing more PC cuts. The government must have a climate ‘smart lens’ on all policies, in particular tax policy. It should also introduce taxes to incentivize a just transition in areas like agriculture to limit petroleum-based fertilizers and pesticides to encourage a shift to regenerative farming (as well as more ‘sin taxes’ on greenhouse gas emitters like plastics producers and the transportation sector). Sin taxes on tobacco can be replicated on junk food, soft drinks, or gas-guzzling sport-utility vehicles like RVs as well as recreational vehicles like quads, speed boats, and jet skis, with tax credits for bicycles, canoes and other non-emitting modes of travel.

Given that health spending accounts for nearly 40 percent of the Manitoba budget, the government must avoid a medical model of “health” care that waits until people are sick to treat them. A progressive approach to the budget means recognizing that the best way to address escalating health spending, and our economic position, is to reduce poverty and improve health equity across the board. Bettering the incomes of Manitobans with the lowest incomes and addressing other determinants of health, like trauma from abuse and oppression, would also save money. The not-for-profit organization Canada Without Poverty estimates that poverty alone costs the Canadian health care system $7.6 billion a year.

Measuring and addressing real health indicators, like access to healthy food, will save health care funds. Focusing health strategies to address preventable illnesses like diabetes and heart disease will also save money. Unfortunately, the NDP health promises this election focused mostly on spending to reduce wait times by hiring more doctors and nurses, or on reactive rather than preventative medicine. Focusing on keeping people healthy is progressive. Ensuring access to preventative health services not covered by the public system like dentistry, somatic healing therapies and strategies to reduce stress like accessible physical activity and recreation, would go a long way to improving the health of Manitobans.

Another progressive budget action the NDP must make is a truly participatory budget process. This would involve ensuring social movements like labour and climate justice organizations, as well as business and industry, are at the budget table. Manitoba’s first First Nations premier holds a master’s degree in Indigenous governance. This should give him an edge in developing a more collaborative governance model and participatory approach to the budget that could improve outcomes for all.

In the postmortem of the election, PC strategists seemed proud of their bigoted ad strategy, saying they ran the campaign they needed to run (this was presumably evidenced by the fact the party held onto its base of 22 seats). And just like the PCs, who ran on harmful promises, the NDP campaigned on dangerous ones of their own—including billions in tax cuts. Whether the NDP was pandering for votes by appealing to imagined regressive public opinion, or neutralizing the racism that Kinew undoubtedly faced, these cuts amount to self-imposed limitations that will delay the progress we need. It leaves me wondering if there are NDP MLAs who, when it comes time in the budget speeches to clap for the tax cuts, will do like I did, and sit on their hands.

Marianne Cerilli is a health educator, social innovator and community development aficionado who was a three term NDP MLA. She has created an intersectional participatory budget process called Health is Wealth. Visit her personal website at mariannecerilli.ca.

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