* Spending to tax cuts ratio 6:1
* Middle income tax rate reduced to 13.5 percent in 2006 - bracket creep continues
* Basic Personal Exemption increased by $100
* Increased spending on health care
* Budget is balanced, overall provincial debt continues to sore, no long-term economic plan

WINNIPEG: The Canadian Taxpayers Federation (CTF) today responded to the Manitoba government's 2005/06 budget. The budget contained some tax relief, a series of spending commitments and further debt repayment.

"For every dollar in tax cuts, there are $5 dollars in new spending," said Adrienne Batra, the CTF's Manitoba Director.

"The tax cuts announced in today's budget are certainly welcome but considering the government is flush with cash from transfer payments, it is questionable why tax relief was delayed until next year, " added Batra. The provincial government received 14 percent more in transfer payments from the federal government this year which bolstered revenues by an additional $349 million.

Some of the tax relief measures included: a reduction in the middle tax rate dropping it from 14 per cent to 13.5 per cent in 2006, increase in the Basic Personal Exemption to $7,734, reduction in the Education Support Levy by $30 million (for a savings of $120 for a home assessed at $125,000), additional 17 per cent reduction of school taxes collected on farmland, corporate tax rate reduction to 14.5 per cent in 2006 and small business tax rate reduced to 4.5 percent in 2006.

"A family of four with two incomes earning $60,000 will save $49 on their tax bill, but taking into account the province has not indexed tax brackets to the rate of inflation, the insidious phenomenon known as bracket creep will eat up much of the savings," noted Batra. "The small tax reductions in today's budget are laudable but do not go nearly enough to keep Manitoba competitive with the rest of the country as we remain the highest tax jurisdiction west of Quebec."

The big winner in today's budget was once again health care. "With no plan to find efficiencies, contract out services or provide timely access to care, the government recklessly poured $200 million into the system," said Batra. "The government missed a great opportunity to learn from other jurisdictions, like British Columbia, who have loosened the reigns on the publicly dominated health care system by contracting out services to the private sector." The British Columbia government is now saving $66 million a year in the health care sector by outsourcing services such as food preparation, security and cleaning.

The 2005/06 budget has been balanced and as per the Balanced Budget, Taxpayer Protection, Debt Retirement Act, the province has made a $110 million payment to the provincial debt, $14 million more than what is required under the legislation. "It is commendable that the government has continued to pay down the debt in accordance with the legislation, however overall (excluding pension liabilities) government debt has increased by $359 million since the last fiscal year," said Batra. "We cannot continue to mortgage our future and turn a blind eye to escalating debt costs - this government has to come up with a long-term economic plan to tackle this growing problem."

The budget also contains a $314 million payment to the Fiscal Stabilization Fund, $150 million of which has already been earmarked for health care.

"Awash with millions of dollars from other Canadians through transfer payments, increased gambling revenues and small economic growth within the province, the government missed a significant opportunity today to put Manitoba on the road to being a have province," concluded Batra.