Education tax cut increases fairness, say KAP, AMM

The rollback has led to criticisms that it’s a tax cut for wealthy landowners at the expense of education funding, which could hurt rural communities

Manitoba’s new education tax system will be fairer, farm advocates say.

The Pallister government’s promised education property tax cuts are a step in the direction of fairness, but won’t be a huge windfall — at least not this year, said KAP president Bill Campbell.

“Education funding needs to be equitable and equal for citizens of Manitoba and not necessarily based on some people’s assets. Not everybody’s treated the same under this current model,” he told the Co-operator.

But will the rebate be a windfall for landowners? “It may be for some, but it isn’t for Bill Campbell,” he said.

On April 7, the province rolled out its 2021 budget which called for $248 million in education tax rebates to landowners.

“I think we’re just moving to a fair, more reasonable way of supporting education in our province without punishing senior citizens for trying to stay in their own home a little longer or picking on farmers in rural Manitoba,” Premier Brian Pallister told reporters in a news conference on budget day.

A long-lobbied change

The province promised residential and farm landowners a rebate of 25 per cent on education tax paid in 2021. This will rise to 50 per cent in 2022. Other types of properties would receive a 10 per cent rebate.

The rebate will be based on the school division special levy and community revitalization levy before the Education Property Tax Credit Advance, the province said. Eligible landowners will continue to pay education property taxes but will get their rebate cheques in the same month that municipal property taxes are due, say budget documents. 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 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.

For Campbell, who said he pays $12,000 in education property taxes annually, the net effect will be a few hundred dollars this year.

Groups like KAP and the Association of Manitoba Municipalities (AMM) have long said farmers pay a proportionally unfair amount of education property taxes. In 2019, the Co-operator reported that of the $850 million the province had collected in education property taxes that year, farmers had contributed $64 million or 7.5 per cent, accounting for tax rebates.

Campbell said he paid $12,000 on his 2,500 acres. For some farmers, this could amount to $60,000 a year if they farmed very high-value land, the article said.

The tax burden is largely due to a rising percentage of education funding raised at a municipal level and to a rapid increase in the value of farmland.

Unfortunately, the rise in land values has no bearing on his ability to pay his taxes, said Campbell.

In 2011 he had virtually no revenue, “but I still had to pay my property taxes or they’d take away my land,” he said.

“Essentially what I’m saying is a fair share would be on your ability to pay. If I have a good year, and if I prosper I should be able to provide for education funding,” Campbell said. “I’m willing to contribute when I can.”

A 2004 Western Producer article shows that the government of the day was contemplating new education funding models — a draft report leaked to the public caused outrage among farmers when it suggested a province-wide, flat mill rate. That plan, if it had been implemented, would have seen the mill rate for farms decrease in 22 out of 25 school divisions, but rise (almost 20 per cent, one farmer said) in 13.

At the time, KAP wanted the special levy removed so farmers could rather support education through residential property taxes, the article says.

In a position paper sent to the minister of education this March, the Association of Manitoba Municipalities cited resolutions going back to 2013 in which AMM members asked the group to lobby for “a new modernized model.”

“We welcome the provincial commitment to phase out the Education Property Tax as committed in the most recent speech from the throne,” AMM wrote in the March 18 paper. “It is vital that a plan to ensure the needs of taxpayers and the services provided through property taxes is developed in close consultation with our organization before any additional changes are contemplated by the provincial government.”

“As the Association of Manitoba Municipalities (AMM) has long called for the modernization of Manitoba’s education funding model, we are reviewing the province’s commitment to start phasing out education property taxes this year,” said AMM president Kam Blight in a statement to the Co-operator April 15.

Blight said AMM has been in contact with the department of municipal relations to ensure municipalities would get the information needed to transition to the new model.

Some municipalities have expressed concerns about the process of mailing rebate cheques rather than adjusting tax bills, and AMM is working with the province to try to find a more streamlined approach, Blight added.

Some objections

The tax cut wasn’t popular with all groups.

The massive tax breaks to farmland may seem like an initial win to established farmers but the long-term results will proliferate a pattern that will be costly to the next generation of all farmers and rural communities,” said Manitoba National Farmers Union (NFU) co-ordinators Ian Robson and Anastasia Fyke in a statement on April 13.

“The ones who will actually lose are the students and schools, as this is a major loss to that area of the budget that remains unaccounted for. This will result in encouraging higher land prices in lieu of paying the education tax,” they wrote. “This situation has no winners.”

Provincial budget documents repeat that education funding will not be cut, but will rise by $1.6 billion over the next four years. The province has alluded to paying this out of general revenue, like other provinces that have phased out education property taxes.

“Even if this is the case, it will put more stress on the greater public, many of which are not landowners,” Fyke told the Co-operator. “So rather than people in the wealthier classes paying, there is an even bigger burden put on the poor.”

“Farmers are complaining because they bought out the neighbourhood causing depopulation but also buying the assessed land which carries the tax, they were prepared to pay the tax, then be given a credit,” Fyke and Robson wrote. “Many understand it’s part of doing business and a small price to pay to farm.”

Survey data from EngageMB.ca shows that, of measures to help people and businesses recover from pandemic losses, reducing education property taxes received a mixed response. Twenty-three per cent of those surveyed were sure it would be “very helpful,” the least confident response to the relief options proposed.

A total of 55 per cent of respondents thought a tax cut would help at least somewhat, while 41 per cent thought it wouldn’t help much or at all (four per cent were unsure). By comparison, respondents were largely in favour of wage subsidies for businesses (75 per cent), deferring interest on pubic services (78 per cent), grant programs for businesses forced to close (87 per cent), and commercial rent assistance for small businesses (85 per cent).

Some took to social media to express their displeasure.

“Landowners should pay taxes. This is ridiculous,” wrote a commenter on a Co-operator Facebook post. “The premier expects teachers to buy supplies for their classes. While cutting wealthy landowners’ school taxes.”

Liberal Leader Dougald Lamont also criticized the rebate.

“They are ignoring the needs of the vast majority of Manitobans while going out of their way to shovel borrowed money towards the wealthiest property owners and businesses in the province — including the premier himself,” he said in an April 8 statement.

The province has projected a budget deficit of about $1.6 billion this year, which it largely attributed to COVID-19-related expenditures and losses.

About the author

Reporter

Geralyn Wichers

Geralyn Wichers grew up on a hobby farm near Anola, Manitoba, where her family raised cattle, pigs and chickens. Geralyn graduated from Red River College’s Creative Communications program in 2019 and was previously a reporter for The Carillon in Steinbach. Geralyn is also a published author of science fiction and fantasy novels.

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