A recent study on investment and taxes conducted by the Institute of Chartered Accountants of Manitoba (ICAM) has reaffirmed what the Canadian Taxpayers Federation has been saying for a long time - taxes need to be reduced.

ICAM's study looked at six jurisdictions, comparing Manitoba to Alberta, BC, Saskatchewan, and Ontario (and Canada as a whole) as a place to work, live and invest. Manitoba has fallen behind Alberta, BC and Ontario in providing meaningful tax relief. The study concluded that even though the province has made minor reductions to income tax brackets and business taxes, Manitoba is still well behind most other jurisdiction.

ICAM's report stated "the effective tax burden - particularly at the highest income levels - is a prime consideration when entrepreneurs or skilled workers are contemplating where to relocate or start up a business. The lower the tax burden, the more likely a province can attract and keep productive workers."

The challenge for Manitoba is two-fold - first business taxes, second income taxes. Manitoba's corporate tax rate is 15.5 percent (recently adjusted in the last provincial budget). Alberta boasts an 11.5 percent rate while Ontario comes in at 14 percent for 2004. These percentages alone show that Alberta and Ontario are going to enjoy a higher return on their investments since the rates are lower.

On the personal income tax front, Manitobans are the highest taxed west of Quebec. An income of $65,000 and up in Manitoba puts one in the highest tax bracket paying a rate of 17.4 percent, compared to Saskatchewan's 15 percent rate, Alberta's 10 percent and BC's 11.7 percent.

Paying down debt is also a priority when it comes to investment dollars coming to Manitoba. ICAM's study showed that as the debt-to-GDP ratio is reduced, the investment climate will improve. Since less money would be allocated for interest payments on debt, there is more flexibility to allocate those funds elsewhere.

High taxes result in businesses relocating to jurisdictions with lower tax rates. In some cases they go to other countries, but more often than not they go to another province. Governments need to recognize that by lowering taxes they actually retain and even grow their tax base.

Compared to other industrialized nations, Canada has one of the highest combined federal-provincial business tax rates. This already puts us at a significant disadvantage, however Manitoba could do its part by lowering its business tax rate. This would help stimulate the economy, put downward pressure on outmigration, and most importantly, it would give Manitoba businesses a competitive advantage.

So, Mr. Finance Minister here's a thought - rather than wait for every other province to lower its tax rates and attract all of our businesses there, why doesn't our province take the initiative and get ahead of the game Bottom line is Manitoba is losing at the tax game.

-- Adrienne Batra
Provincial Director, Manitoba
Canadian Taxpayers Federation