When a trustee candidate comes to your home during the civic election campaign and says he or she wants to discuss the issues in your school division, the first thing you should ask about is what position the candidate has on school property taxes, the levies that comprise about 50 per cent of your tax bill if you dwell in an urban centre, and significantly more if you live in rural Manitoba.
At budget time, the school property taxes levied on your home are invariably increased by school division trustees, taking more of a bite out of your take-home pay each year, despite the credits you may receive from the province to alleviate some of the misery. In Winnipeg, whatever tax relief has been achieved by a 13-year municipal property tax freeze has been eroded by increases in property taxes imposed by local school boards, which happen to be the highest tax of this type levied in Canada.
In cottage country, the school property taxes imposed, following the recent province-wide reassessment, are so extreme that owners face increases of from 20 to 200 per cent, depending upon the school division in which their summer retreat is located. The supreme irony is that these taxes are imposed without input from cottage owners, as they are ineligible to vote in local school division elections, since their home-away-from-home is not classified as a principle residence. It is a case of taxation without representation, which on face value appears to be completely contrary to the avowed principles of a democratic society.
The province is quick to point out the measures it has taken to correct some of the injustices of an extraordinary tax regime. An August 19 e-mail received by Warren resident Duncan Letby from Manitoba Finance Minister Rosann Wowchuk (forwarded to the WREN) said the government has eliminated its Education Support Levy (a property tax to fund education) and increased the basic Education Property Tax Credit from $250 to $650 commencing in 2009. The minister said the elimination of the ESL translated into a $356 saving for every $100,000 of assessed value on a home.
The maximum Education Property Tax Credit for low-income seniors was also raised from $625 to $800, she added.
“Combined, the Education Property Tax Credit increase and the removal of the provincial ESL save all Manitobans more than $250 annually in property and school taxes,” wrote the minister.
The government deserves to pat itself on the back for at least attempting to make a dent in the property tax burden, but it still doesn’t solve the core problem — education should not be funded through property taxes; education is a societal benefit that should be funded from general revenues in the same manner as health care.
Until the system is reformed, there will continue to be inherent inequities, and trustees, who invariably claim the province fails to adequately address true education costs to school divisions, will continue to raise school property taxes. That claim is made despite annual increases in the province’s funding to school divisions and the Tax Incentive Grant which has been extended for a third year to help school divisions hold the line on tax increases. The incentive limits annual tax increases to two per cent, which still means school taxes are moving upward. School property taxes are not even being frozen as has been the case of municipal taxes in Winnipeg.
“I am convinced that substituting higher personal taxes for school taxes,” wrote Wowchuk, “or as some have suggested a higher retail sales tax in place of school taxes, injects any fairness into the tax system than has been provided by our government since 1999. If income taxes are substituted for school taxes, it would be difficult to provide relief to a person who already does not pay income tax but is experiencing a reduction in low income. Sales tax, on the other hand, is considered the most regressive of taxes, so an increase would impact low-income households relatively more than others.
“Finally, I would point out that tax fairness dictates that a person living in a single $300,000 house should be treated the same as another person who owns a house and cottage with the same combined value.”
The last comment is somewhat spurious. How many people make sure they buy a cottage that in combination with a home totals $300,000, or any other amount? The minister should realize that many cottage owners are not necessarily wealthy. They may have inherited a cottage from a family member or have a $120,000 home in the city and happen to have saved enough to buy a cottage that doesn’t completely drain their savings account. They may simply be working stiffs who want to take part in the Manitoba dream of owning a cottage and escaping the city for a few weekends a year. Still, they are paying school taxes in the city as well as in a rural area which may eventually deplete their bank account if the assessed value of their cottage continues to rise and a damper is not placed on urban school property taxes.
As to the issue of fairness, income taxes are fair because they are based on ability to pay and are collected from virtually every wage-earner in the province except those in a low-income situation. Since those eking out a living in Manitoba are not expected to contribute to provincial coffers through the income tax system, they cannot be said to be facing another burden if education is funded from general revenues. Indeed, if they happen to own even a modest home (seniors on a fixed income especially), they are instead burdened by school property taxes under the existing system regardless of the tax credits available from the province.
Which method of funding is fairer in the long-run?
What the minister really means to say is that any public perception of even an inkling of an income tax hike or sales tax hike (economists say sales taxes are more equitable than income taxes) is a political hot potato.
With provincial politicians unwilling to fully address the issue of school property taxes at this time, it is incumbent upon taxpayers to at least ask the trustee candidates what their position is on the burden of annual tax increases. Until some leader at the upper level of government has the courage to be make real reforms, trustees are at the forefront and should be answerable for the position they take on the issue to voters.