The Frontier Centre for Public Policy, a Manitoba think tank, has put out a report on taxes the Doer government should pay close attention to.
Unlike most comparative tax analyses, this one compares Manitoba’s tax burden not only to surrounding provinces, but to nearby states south of the border as well.
It’s a useful comparison since we compete not only with other provinces for capital, skilled labour and entrepreneurial prowess; we compete with the United States, too.
The report compares Manitoba to three western provinces and Ontario. But it also includes North Dakota, Minnesota, Montana and Washington State in its analysis — which in many ways are regions far more relevant to Manitoba than provinces east of Ontario.
And the diagnosis isn’t good. Manitoba, perhaps not surprisingly, has the highest tax burden among the nine geographic areas.
The report compares everything from personal income taxes and sales tax to corporate and payroll tax.
Manitoba scores 52.8% on the tax load index, well ahead of North Dakota at 34.1% and Minnesota at 33.2%.
Washington State has the lowest index rating at 20.3% and Alberta has the lowest Canadian rating at 27.8%
“The wide tax gap underlies Manitoba’s relative lack of growth and its chronic and increasing dependency on outside transfers like equalization,” the report says.
Manitoba is only one of two regions — the other is Ontario — that even has a payroll tax.
In Manitoba, the payroll tax is known in the business community as the “job killer tax.” It’s a disincentive to hire more employees and it discourages businesses from setting up here, including head offices.
Manitoba is one of only four regions that has a capital tax on business. Our income taxes are the highest in the West and our corporate taxes are second only to Saskatchewan.
In fact, there isn’t a single tax category in the report where Manitoba is competitive with its neighbours.
And we wonder why we consistently fall behind the Canadian average on economic growth, job creation and wages?
The Doer government should take a good look at this report, and many others that draw similar conclusions, before drafting its 2006 budget.
The future prosperity of Manitoba is at stake.