WINNIPEG — Recent increases in school taxes have put a dent in the Manitoba government’s estimate of how many homeowners are better off under its new tax-credit system.
"We have seen some unexpectedly high increases from school divisions," Finance Minister Adrien Sala said in an interview.
Last year, the NDP government eliminated a refund system on education taxes on property that, for homeowners, offered an annual $350 credit and 50 per cent rebate. In its place, the government instituted a flat $1,500 credit which, unlike the rebate, does not automatically rise in line with property tax increases.
Premier Wab Kinew and other New Democrats stood outside a bungalow in the St. Vital neighbourhood at the time and said owners of that property would get more money back under the new system.
But with increases in both property assessments and school division mill rates this year, that appears to be no longer true.
The bungalow's assessment has increased to $400,000, according to the City of Winnipeg's website. And with a higher mill rate this year in the area's Louis Riel School Division, a home of that value will receive $49 less in tax credit this year than it would have under the old credit-and-rebate system, the government's central communications branch confirmed.
The government said last year the change, along with eliminated rebates for commercial properties, would net the province an extra $148 million a year. It said some 83 per cent of homeowners — those in middle and lower-value properties — would be better off under the new system. But as assessments and mill rates rise, that number is likely to fall because the $1,500 credit covers a smaller percentage of the total property tax bill for many owners.
The government's budget last month included a boost to the education property tax credit, to $1,600, for next year. Sala said that will help homeowners, although he said there is no word yet on whether the credit will increase again in future years.
"That next year ... will still see nearly 80 per cent of Manitobans better off," Sala said, adding that the figure relies on no further big increases in school mill rates.
The government has made affordability one of its key priorities since winning the 2023 election. It suspended the provincial fuel tax for one year and reinstated it at a lower rate. It froze hydroelectricity rates this year, although Crown-owned Manitoba Hydro is seeking to raise raises 3.5 per cent in each of the next three years.
Municipal and school property taxes have jumped in many areas — a result, Sala says, largely of the previous Progressive Conservative government's funding freezes.
Automobile insurance rates are up this year. Income tax changes will also see some Manitobans pay more.
In this year's budget, the province stopped raising income tax brackets in line with inflation every year. As people earn more money to keep up with inflation, they can now be bumped into higher tax brackets.
It's a move that runs contrary to most other provinces and is estimated to generate an extra $82 million a year to start.
One tax expert said the move will generate more money for the government each year in the future.
"Without actually increasing the brackets or touching the rates, they have a real increase in their income, and it's at the expense of us," said Michelle Gallant, a professor at the University of Manitoba's law faculty who specializes in income tax.
The Opposition Progressive Conservatives said the income tax change will hurt many people at a time when the cost of living is rising sharply.
"It's certainly a hidden tax and removes any sort of inflation protection," Tory finance critic Lauren Stone said.
This report by The Canadian Press was first published April 13, 2025.
Steve Lambert, The Canadian Press
