Manitoba’s education tax phase-out begins

Budget pledges a 25 per cent rebate cheque in 2021; existing farmland school tax rebate to be reduced

Manitoba’s latest budget follows through on a move the government telegraphed in last fall’s throne speech, by starting a phased removal of education tax on farm and residential properties.

Finance Minister Scott Fielding’s budget, released Wednesday, calls for about $248 million in education tax rebates in 2021 alone for about 658,000 property owners.

Owners of Manitoba residential and farm properties in 2021 can expect a rebate of 25 per cent on education tax paid in 2021, while owners of other types of properties will get a 10 per cent rebate. In 2022, the rebate for residential and farm properties will be raised to 50 per cent.

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The rebate is to be based on the school division special levy and community revitalization levy before the Education Property Tax Credit Advance, the province said.

Property owners eligible for the rebate will continue to pay education property taxes but will get their rebate cheques in the same month that municipal property taxes are due, or earlier, the province said. The province will send out the new rebate automatically, thus property owners will not need to apply to receive it.

The rebate will also mean a proportionate 25 per cent cut in Manitoba’s existing school tax offsets in 2021 — and that includes the current farmland school tax rebate, as well as the education property tax credit and advance, seniors’ school tax rebate and seniors’ education property tax credit.

Thus, the existing farmland school tax rebate — which in 2020 rebated eligible landowners up to 80 per cent of the school tax owing on their farmland, to a maximum of $5,000 — will instead rebate up to 60 per cent of school tax owing in 2021, to a maximum of $3,750.

In its budget documents, the province gave an example of a farm property with $5,600 owing from a school division special levy. In 2020, the province’s farmland school tax rebate would apply on $4,480 of that amount and the landowner would owe a net special levy of $1,120.

In 2021, the same landowner would get a rebate cheque for 25 per cent of the total levy, or $1,400, and he/she/they will still have to apply to receive the farmland school tax rebate, which would be proportionately cut by 25 per cent, to $3,360.

The landowner would thus owe a net special levy of $840 for 2021, down 25 per cent from its 2020 level.

The planned phase-out will also include a 2020 education property tax freeze, the province said Wednesday.

Residential properties eligible for the rebate will include single dwelling units, condos and multiple-unit dwellings, the province said. Property owners who get the new rebate on the community revitalization levy and also get a provincial tax increment financing grant will have their grant reduced by the amount of rebate.

Properties that are exempt from education property taxes, or that pay grants in lieu or payments in lieu of taxes, will not be eligible for the new rebate.

Owners of “other” properties, such as commercial, industrial, rail, pipeline or designated recreational land, will only get rebates at the 10 per cent level as they also can expect help from “significant” business tax measures in the 2021 budget, as well as pandemic-related business support programs, the province said. Also, the province noted, education property tax remains a tax-deductible expense for businesses.

The rebate announcement brings an early start to a 2019 campaign pledge from Premier Brian Pallister’s Progressive Conservatives. At the time, the party promised to phase out education taxes on property over 10 years, or sooner, starting in 2022.

In last October’s throne speech, the government said it would instead begin the phase-out process in 2021, but didn’t give details at the time.

Manitoba, the government said Wednesday, is “currently the only province that utilizes locally-determined municipal school property taxes to fund its education systems.”

Phasing out education property taxes, the province said, will “modernize Manitoba’s tax structure and put Manitobans on an equal footing with other provinces that fund education from general revenues.”

Funds, bonds, scholarships

Overall, the province’s 2021-22 budget projects $17.838 billion in revenue against $18.255 billion in spending, for a net budget deficit of $1.597 billion in the fiscal year.

New spending of interest to farmers in the budget also includes:

  • increasing the Conservation and Climate Fund by $400,000, to $1 million, to fund projects that reduce greenhouse gas emissions;
  • a new $1 million Organics Green Impact Bond to divert organic waste from landfills;
  • raising Watershed Districts Program funding to nearly $6 million; and
  • $1 million for a new 4-H Manitoba Scholarship Program, working with the Brandon Area Community Foundation and Manitoba 4-H Council to set up an endowment fund that’s expected to support $42,000 in scholarships per year, starting in 2021.

— Glacier FarmMedia Network

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