It’s becoming more and more noticeable. It’s actually starting to drive me crazy! There are still a few weeks left before the April 30 Personal Income Tax deadline and I’ll still complete hundreds of tax returns before then. That is not what is driving me crazy.
I normally review the 2010 Income Tax Summary with my clients once their taxes are completed. I review their total, net and taxable incomes (sometimes they are different for various reasons). I review the non-refundable tax credits they are claiming. Then I get to the part that is driving me really batty.
“Here is the amount of your federal tax payable and here is the amount of your Province of Manitoba tax payable”. Then I pause. Now here is where I’ve started to hesitate more and more.
And this is what is driving me crazy. I point out again how much their provincial tax payable is. And recently I’ve started to point out that about 10 years ago, this figure used to be about 60% of what the federal tax payable used to be. And now it’s anywhere from 80 to 120%!
Yes, I have actually seen many tax returns where the provincial tax payable is actually HIGHER than the federal tax!
How can that be??
Well, the Province of Manitoba stopped increasing the tax brackets used for calculating income taxes and for calculating various non-refundable credits. The Feds and the Provinces used to have the brackets indexed to inflation so that all the brackets increased a little bit each year.
About 10 years ago the Province of Manitoba decided to stop increasing its brackets with inflation. It realized it could get more tax revenue each year if they didn’t. (You earn a bit more income each year, you don’t pay any more federal taxes, but you sure do pay more provincial taxes!)
Those with lower incomes, those with children, and seniors have been affected the most. Those with high incomes and not many credits to claim have been affected the least.
Do I have your attention now?!?
If you have already completed your taxes (by yourself, using software, or using a tax preparer or tax professional like myself), have a look at your tax summary or page four of the T1 General or look at your Notice of Assessment if you have already received it. Look at how much your Federal Tax Payable is; and look at how much your Provincial Tax payable is!
I bet if you take your provincial tax payable and divide it into your federal tax payable, it is way more than 60%!
If you still have some past tax returns (you should be keeping them for 6 years), have a look at those from several years ago. I bet the provincial taxes payable were a much lower percentage of federal taxes than they are today!
For the past ten years, the Province of Manitoba has left their tax brackets and the amount of the tax credits the same almost every year. The federal amounts have been indexed to inflation.
Here’s an example: the basic federal credit for 2010 is at $10,382; the same Manitoba basic credit is at $8134 (about 78%). Back in 2003, the federal amount was $7756 and the provincial amount was $7634 (about 98% of the federal amount).
So say you had taxable income of $10,382; you would pay absolutely no federal income tax, but you would be paying some Provincial Taxes! So much for our provincial government’s concern about those with low incomes! If they were really concerned, don’t you think they’d do something about this??
The Age Credit in 2003 was $2016 for the feds and $1890 for the province (or 94%). Today the Age Credit is $6446 for the feds and $3728 for the province (now only 58%)!
A senior (65+) today could earn almost $17,000 and pay no federal tax. But at $12,000, that same senior starts paying Provincial taxes! Does that seem fair to you??
And the Government does not have to announce anything, send out a news release, or even vote on anything to keep their brackets the same. So that’s why no one knows about it or notices it.
I’ve written about this before, but maybe I can get your attention in the midst of “tax season”.
If you have already completed your taxes, have a look at your taxes payable and see what I’m upset about.
And what can we do about it? Well, you can write to your MLA and our Premier and our Finance Minister!
Or you can drop by my office and sign my petition. I already have many signatures, but would love to have hundreds more. There are some other petitions going on around the province too.
One of my tax clients brought some up to the Anola area to place in some public places. I had one at the Ste Anne Curling Club during the season. If you are there for their Annual Suds Spud & Steak Night on Friday April 29, I’ll make sure a petition is there too!
Maybe with hundreds of voices we can get our Provincial Government to start increasing their brackets and indexing them to inflation so we aren’t paying more and more taxes each year without even knowing about it. They need to be held accountable!
Anni Markmann is a tax professional and an independent financial advisor working, living, and volunteering in our community. Contact Anni at anni@steannetaxservice.ca or 422-6631 or 107 Central Ave in Ste Anne.