The old English proverb "the devil's in the details" is an apt way to summarize budget 2006. At first blush, one would think the NDP government had found religion on fiscal prudence, but dig a little deeper and sadly, that's not the case.

On the income tax front, the middle tax bracket was reduced from 13.5 to 13 percent and the basic personal exemption was increased by $100 to $7,834. Sounds pretty good, however upon closer inspection we find the reductions don't come into effect until January 2007. Total income tax savings including the small increase in the basic personal exemption for a Manitoban earning $40,000 a year will be $65.90, or $5 a month.

Although small tax reductions are a welcome measure, the province has not indexed tax brackets to the rate of inflation thereby allowing bracket creep to continue. Bracket creep is defined when inflation pushes income into higher tax brackets resulting in an increase in income taxes with no increase in purchasing power. Because the NDP government has allowed this insidious tax to continue unabated, most savings in January of 2007 will be eroded.

Tax relief for the job creators in Manitoba received much of the same treatment; the small business tax rate was reduced to 3 percent and the corporate tax rate was reduced to 14 percent. But again, these changes don't come into effect until January and July of 2007 respectively.

There was some immediate tax relief from elimination of the Education Support Levy on property, a commitment the CTF commends the NDP government for fulfilling.
Manitoba's rural communities also received much needed school tax relief as the province increased the farmland school tax credit to 60 percent. These measures alone will save homeowners on average $109 a year on a $100,000 home. However, once again, those pesky details show a different picture.

Since the province has vacated some property tax room, school boards are set to raise taxes, thus clawing back most, if not all, the. In the St. James-Assiniboia and Seven Oaks school divisions for example, draft budgets would leave only $28 of the $109 for the homeowner. The challenge now becomes what to do about the ability for school boards to raise taxes; a thorny issue the province is loathe to address. In this instance, the CTF has repeatedly called on the government to extend the Taxpayer Protection Act to school boards (and municipalities).

The NDP government increased spending by 6.8 per cent in budget 2006, the increases coming in the predictable areas of health care and the civil service commission. And with spending on the rise, so too is Manitoba's debt which has ballooned to $16.6 billion. Even though the budget is balanced under generally accepted accounting principles (for the first time in 7 years), our government continues to spend well beyond its means with a dip into the fiscal stabilization pond to the tune of $85 million.

As the debt continues to climb, so too does Manitoba's reliance on equalization payments which are now at a historic high with over $3 billion coming from taxpayers in other parts of the country. Incredibly, 33 per cent of Manitoba's $8.6 billion budget is coming from outside the province.

There is little in budget 2006 that will move Manitoba towards a "have" province. It reinforced the mushy middle with a little bit for everyone, and not enough for anyone.

Editor's note: The CTF has provided additional comments on the recent Teddy Awards; please visit www.taxpayer.com for more information.