EX-99.1 2 o61190exv99w1.htm EX-99.1 EX-99.1
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BUDGET 2010 / 1
 
SUMMARY BUDGET 2010/11

 


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2 / BUDGET 2010
 
SUMMARY BUDGET
For the Fiscal Year Ending March 31, 2011
With Comparative Data for the Year Ending March 31, 2010
                                         
                            Per cent Change  
                            2010/11 Budget from  
    2010/11     2009/10     2009/10     2009/10     2009/10  
    Budget     Forecast     Budget     Forecast     Budget  
REVENUE SOURCE
                                       
Income Taxes
    2,667       2,654       2,689       0.5 %     (0.8 %)
Other Taxes
    3,385       3,248       3,197       4.2 %     5.9 %
Fees and Other Revenue
    1,635       1,621       1,593       0.9 %     2.6 %
Federal Transfers
    4,126       4,072       4,103       1.3 %     0.6 %
Net Income of Government Business Enterprises
    699       687       816       1.7 %     (14.3 %)
Sinking Funds and Other Earnings
    208       220       246       (5.5 %)     (15.4 %)
 
                                 
TOTAL REVENUE
    12,720       12,502       12,644       1.7 %     0.6 %
 
                                 
EXPENDITURE SECTORS
                                       
Health and Healthy Living
    5,085       4,851       4,731       4.8 %     7.5 %
Education
    3,420       3,240       3,228       5.6 %     5.9 %
Family Services and Consumer Affairs
    1,326       1,321       1,235       0.4 %     7.4 %
Community, Economic and Resource Development
    1,819       1,834       1,765       (0.8 %)     3.1 %
Justice and Other Expenditures
    848       1,072       871       (20.9 %)     (2.6 %)
Debt Servicing Costs
    767       739       766       3.8 %     0.1 %
 
                                 
TOTAL EXPENDITURE
    13,265       13,057       12,596       1.6 %     5.3 %
 
                                 
NET INCOME (LOSS)
    (545 )     (555 )     48                  
 
                                 
 
NOTES:    
 
  The 2009/10 Budget numbers originally presented in the 2009 Budget Address and the 2009/10 forecast from the Third Quarter Financial Report have been restated to be consistent with the 2010/11 presentation for the Government Reporting Entity.
 
  Details of Expenditure and Revenue for Fiscal Year 2010/11, and a reconciliation to the amounts reported for Core Government are found in Schedules 1 and 2.
 
  Information on the structure of the Summary Budget is provided in Appendix 2.
 
  Numbers may not add due to rounding.

 


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BUDGET 2010 / 3
 
n SUMMARY BUDGET 2010/11
Revenue
Revenue in 2010/11 is projected to increase $218 million from the 2009/10 Forecast.
Incomes Taxes are projected to increase by $13 million, with a $25 million increase in Individual Income Tax offset by a decrease of $11 million in Corporation Income Tax. Budget 2010 projects a $137 million, or 4.2%, increase in Other Taxes reflecting continued growth in retail sales taxes, and an $18 million increase in tobacco tax while Corporations Taxes are forecast to decrease by $23 million, due to a reduction in Corporation Capital Tax. Fees and Other Revenue is projected to increase $14 million, or 0.9%. Net Income of Government Business Enterprises (GBEs) is projected to increase $12 million, or 1.7%. Federal Transfers are projected to increase $54 million, or 1.3%.
Expenditure
Total expenditure is budgeted to increase $208 million, or 1.6%, from the 2009/10 Forecast.
The growth in Health and Healthy Living expenditure is $234 million, or 4.8%. Education-related expenditure is increasing by $180 million, or 5.6%. Family Services and Consumer Affairs is up $5 million, or 0.4%. Community, Economic and Resource Development expenditure will decline by $15 million, or 0.8%. The Department of Justice remains unchanged from the 2009/10 Forecast. Overall, the Justice and Other Expenditures sector will decrease by $224 million (including year-end lapse), primarily due to the one-time emergency expenditures in 2009/10. Debt Servicing Costs are expected to increase by $28 million.1
In Budget 2010, services to people represent 79% of spending.
  Health and Healthy Living expenditure makes up 38.3% of total expenditure.
  Education accounts for 25.8% of all expenditure; it includes public schools and post-secondary institutions.
  The Departments of Family Services and Consumer Affairs, Housing and Community Development, and Justice represent 14.9% of total expenditure.
 
1   Debt Servicing Costs are forecast to equal 6.0¢ of every dollar of revenue in 2010/11, down 54.5% from 13.2¢ per dollar in 1999/2000.

 


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4 / BUDGET 2010
 
Schedule 1
Summary Revenue Estimate: Details and Reconciliation to Core Government Estimates
Fiscal Year ending March 31, 2011 (in Thousands of Dollars)
                         
    CORE GOVERNMENT     CONSOLIDATION IMPACTS        
    Revenue     and Revenue of        
Source of Revenue   Estimate     Other Reporting Entities     SUMMARY  
Income Taxes
                       
Individual Income Tax
    2,420,500             2,420,500  
Corporation Income Tax
    246,900             246,900  
 
                 
Subtotal: Income Taxes
    2,667,400             2,667,400  
 
                 
Other Taxes
                       
Corporations Taxes
    196,200             196,200  
Gasoline Tax
    141,300             141,300  
Land Transfer Tax
    51,000             51,000  
Levy for Health and Education
    377,650       (96,058 )     281,592  
Mining Tax
    6,000             6,000  
Motive Fuel Tax
    88,600             88,600  
Retail Sales Tax
    1,668,600             1,668,600  
Tobacco Tax
    225,000             225,000  
Other Taxes
    10,948             10,948  
Education Property Taxes
          715,844       715,844  
 
                 
Subtotal: Other Taxes
    2,765,298       619,786       3,385,084  
 
                 
Fees and Other Revenue
                       
Fines and Costs and Other Legal
    50,190             50,190  
Minerals and Petroleum
    12,261             12,261  
Automobile and Motor Carrier Licences and Fees
    118,026             118,026  
Parks: Forestry and Other Conservation
    30,144             30,144  
Water Power Rentals
    110,000             110,000  
Service Fees and Other Miscellaneous Charges
    128,509       993,736       1,122,245  
Revenue Sharing from SOAs
    25,430       (25,430 )      
Tuition Fees
          192,138       192,138  
 
                 
Subtotal: Fees and Other Revenue
    474,560       1,160,444       1,635,004  
 
                 
Federal Transfers
                       
Equalization
    2,001,500             2,001,500  
Canada Health Transfer (CHT)
    953,358             953,358  
Canada Social Transfer (CST)
    404,698             404,698  
Health Funds
    9,038             9,038  
Infrastructure Renewal
    150,822             150,822  
Manitoba Floodway Expansion
    39,869             39,869  
Shared Cost and Other Transfers
    191,610       374,610       566,220  
 
                 
Subtotal: Federal Transfers
    3,750,895       374,610       4,125,505  
 
                 
Net Income of Government
                       
Business Enterprises (GBEs)
                       
Manitoba Liquor Control Commission
    246,800             246,800  
Manitoba Lotteries Corporation
    312,700             312,700  
Manitoba Hydro
          113,000       113,000  
Workers Compensation Board
          1,436       1,436  
Manitoba Public Insurance Corporation
          25,051       25,051  
 
                 
Subtotal: Net Income of GBEs
    559,500       139,487       698,987  
 
                 
Sinking Funds and Other Earnings
          207,634       207,634  
 
                 
Total Revenue Estimate
    10,217,653       2,501,961       12,719,614  
 
                 

 


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BUDGET 2010 / 5
 
Schedule 2
Summary Expenditure Estimate: Details, Reconciliation to Core Government Estimates and Summary Budget Result
Fiscal Year ending March 31, 2011 (in Thousands of Dollars)
                         
    CORE GOVERNMENT     CONSOLIDATION IMPACTS        
    Expenditure     and Expenditures of        
Sector/Department   Estimate     Other Reporting Entities     SUMMARY  
Health and Healthy Living
                       
Health
    4,652,827       355,635       5,008,462  
Healthy Living, Youth and Seniors
    76,577             76,577  
 
                 
Total Health and Healthy Living
    4,729,404       355,635       5,085,039  
 
                 
 
                       
Education
                       
Advanced Education and Literacy
    627,005       481,163       1,108,168  
Education
    1,506,799       804,423       2,311,222  
 
                 
Total Education
    2,133,804       1,285,586       3,419,390  
 
                 
Family Services and Consumer Affairs
    1,305,442       20,861       1,326,303  
 
                       
Community, Economic and Resource Development
                       
Aboriginal and Northern Affairs
    36,866       597       37,463  
Agriculture, Food and Rural Initiatives
    215,518       178,284       393,802  
Conservation
    123,246       15,527       138,773  
Entrepreneurship, Training and Trade
    144,598       6,502       151,100  
Housing and Community Development
    72,345       153,866       226,211  
Infrastructure and Transportation
    614,213       (117,323 )     496,890  
Innovation,Energy and Mines
    72,793       13,547       86,340  
Local Government
    255,790       (398 )     255,392  
Water Stewardship
    33,436       (324 )     33,112  
 
                 
Total Community, Economic and Resource Development
    1,568,805       250,278       1,819,083  
 
                 
 
                       
Justice and Other Expenditures
                       
Legislative Assembly
    39,006       (283 )     38,723  
Less: Members’ Salary Adjustments
    (264 )           (264 )
Executive Council
    2,841       (50 )     2,791  
Civil Service Commission
    20,480       158       20,638  
Culture, Heritage and Tourism
    63,359       7,315       70,674  
Employee Pensions and Other Costs
    18,060       58,040       76,100  
Finance
    88,759       3,735       92,494  
Justice
    402,166       17,801       419,967  
Labour and Immigration
    58,064       8,467       66,531  
Sport
    11,919       1,242       13,161  
Enabling Appropriations
    81,796             81,796  
Other Appropriations
    30,151             30,151  
Less: Year-End Lapse
    (65,000 )           (65,000 )
 
                 
Total Justice and Other Expenditures
    751,337       96,425       847,762  
 
                 
Debt Servicing Costs
    265,785       500,817       766,602  
 
                 
 
                       
Total Expenditure Estimate
    10,754,577       2,509,602       13,264,179  
 
                       
Subtract: Total Expenditure Estimate (above) from Total Revenue Estimate (Schedule 1)
    10,217,653       2,501,961       12,719,614  
 
                 
 
                       
Net Result for the Year
    (536,924 )     (7,641 )     (544,565 )
 
                 
 
                       
Transfer from Fiscal Stabilization Account
    38,490       (38,490 )      
 
                 
NET INCOME (LOSS)
    (498,434 )     (46,131 )     (544,565 )
 
                 

 


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6 / BUDGET 2010
 
Revenue, 2010/11
Major Sources
Per cent of Total
(Graph)
Expenditure, 2010/11
Major Sectors
Per cent of Total
(Graph)

 


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BUDGET 2010 / 7
 
FINANCIAL MANAGEMENT STRATEGY

 


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8 / BUDGET 2010
 
n   FINANCIAL MANAGEMENT PRIORITIES
The FMS sets out the Government’s priorities for financial management. It includes five main priority areas with one or more measurable outcomes. Each measurable outcome includes objectives for the current year and for future years.
The FMS demonstrates the Government’s commitment to enhancing financial accountability. The report on outcomes for the FMS presented in the 2009 Budget will be available in the fall of 2010.
For 2010/11, the FMS continues to focus on the priority areas identified in prior years and reflects the implementation of Manitoba’s Five-Year Economic Plan.
         
FINANCIAL MANAGEMENT PRIORITY   MEASURABLE OUTCOMES    
Transparency, Accountability and Fiscal Discipline
    Summary Net Income
 
       
 
    Maintaining Accountability for Core Government Expenditure and Revenue
 
       
Stable and Affordable Government
    Credit Ratings
 
       
 
    Expenditures as a Percentage of Gross Domestic Product (GDP)
 
       
 
    Strengthening the Management of Public Resources
 
       
Managing Debt
    Debt Retirement
 
       
 
    Net Debt to GDP Ratio
 
       
Infrastructure and Capital Asset Renewal
    Capital Investments
 
       
Performance Measurement
    Continued Development of Performance Measurement Capacity

 


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BUDGET 2010 / 9
 
n   PRIORITY AREA – TRANSPARENCY, ACCOUNTABILITY AND FISCAL DISCIPLINE
Government has implemented a number of measures to ensure financial accountability and maintain fiscal discipline, including:
  implementing GAAP compliant summary financial statements as of March 31, 2005;
 
  transitioning to summary budgeting and reporting in 2007/08 to present comprehensive information on the total cost of providing programs and services to Manitobans and how the GRE operates as a whole;
 
  publishing an FMS as part of the annual budget and a report on outcomes within six months of the end of the fiscal year;
 
  completing the transition of quarterly financial reporting to a summary basis in 2009/10, consistent with GAAP and as provided in the Budget and Public Accounts;
 
  establishing and implementing plans to eliminate general purpose debt and pension liabilities; and
 
  extending the employer’s share of current service contributions to all employees.
The commitment to transparency, accountability and fiscal discipline continues with the implementation of Manitoba’s Five-Year Economic Plan in Budget 2010.
Measurable Outcome – Summary Net Income
Governments around the world have been affected by the market downturn, the worst global recession since the end of the Second World War. Many governments are facing budget shortfalls as they work to stimulate the economy and manage expenditures. Manitoba is no different.
While Manitoba’s economy has been one of the strongest in Canada, there are financial pressures on the Province and no quick solutions to the issues we face.
Budget 2010 focusses on continued economic stimulus and job creation, protecting key services and responsible management of public funds. This is part of Manitoba’s Five-Year Economic Plan to return to surplus by:
  investing in vital front-line services by continuing to improve health care, education and training, policing and supports for families;
 
  stimulating economic growth by upgrading needed infrastructure to create jobs, and investing in innovation to secure a prosperous future;
 
  managing Government spending strategically to ensure Manitobans’ priorities come first;
 
  restoring balance and returning to surplus by Budget 2014; and
 
  maintaining affordability to keep Manitoba one of the best places to live, work and raise a family.
As indicated in the table which follows, the plan projects a return to surplus in five years based on managing spending and modest revenue growth, combined with an expected recovery of the Manitoba economy.

 


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10 / BUDGET 2010

 
Manitoba’s Five-Year Economic Plan
                                                 
            Five-Year Plan  
    2009/10     2010/11     2011/12     2012/13     2013/14     2014/15  
    Forecast     Budget     Projection     Projection     Projection     Projection  
                    (Millions of Dollars)                  
REVENUE
                                               
Core Government
    10,042       10,218       10,514       10,736       11,151       11,708  
Other Reporting Entities*
    2,460       2,502       2,605       2,675       2,746       2,743  
 
                                   
TOTAL REVENUE
    12,502       12,720       13,119       13,411       13,897       14,451  
 
                                   
 
                                               
EXPENDITURE
                                               
Core Government Programs and Services
    10,644       10,755       11,037       11,156       11,372       11,598  
Other Reporting Entities*
    2,413       2,510       2,530       2,600       2,671       2,668  
 
                                   
TOTAL EXPENDITURE
    13,057       13,265       13,567       13,756       14,043       14,266  
 
                                   
SUMMARY NET INCOME (LOSS)
    (555 )     (545 )     (448 )     (345 )     (146 )     185  
 
                                   
 
*   includes consolidation adjustments
The Plan assumes GRE revenue will rise by a 3.2% average annually from 2010/11 to 2014/15 while GRE expenditure are forecast to increase by an annual average of 1.8% during the same period.
Core Government revenue is forecast to rise by an average of 3.5% annually and Core Government expenditure will grow by an annual average of 1.9% during the five-year period.
Core Government revenue projections are consistent with forecasts of economic growth in the short to medium term. The gradual strengthening of the international economy will boost Manitoba output in 2010 and 2011. Major economic forecasts suggest that by 2012 or 2013, the national and provincial economies will return to an expansion phase of the business cycle. Beginning in 2013/14 own-source revenue projections are based on recent average increases over 2003/04 to 2008/09.
The Manitoba Government is committed to balancing summary net income over the longer term, but has chosen not to make short-term decisions. Instead, a plan has been developed to maintain our strong economic base and return our Province to surplus by 2014/15. Measures include:
  strategic management and prioritization of expenditures;
 
  managing salary costs;
 
  reducing discretionary operating costs;
 
  reallocating funds currently used to cost-share one-time stimulus projects to other provincial priorities in future years;
 
  moving more slowly than planned in delivering new initiatives;
 
  reducing ministerial salary levels by 20%;
 
  not increasing salaries for members of the Legislative Assembly, their staff and senior Government officials for the next two years;

 


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BUDGET 2010 / 11

 
  continuing to find new ways to foster innovative, cost-effective services; and
 
  using funds set aside in the Fiscal Stabilization Account to retire a portion of the debt and interest expense associated with the Core Government operating shortfalls during the economic recovery period.
Continuing to meet the requirements of balanced budget legislation in today’s environment would require deep cuts to public services, tax increases and the cancellation of stimulus investments.
Our responsible plan to restore balance over five years includes amendments to legislation including balanced budget legislation that would:
  require the budget shortfall to be eliminated over four years and a return to surplus in year five of the plan;
 
  keep the legal requirement to have balanced budgets into the future;
 
  exceed the debt payment requirements under the current legislation;
 
  retain restrictions that prohibit increases to major taxes without a referendum; and
 
  reduce ministerial salaries and freeze pay for members of the Legislative Assembly.
An annual financial management strategy and a report on outcomes will continue to be published as required by the current legislation. In addition, in-year financial reporting will provide updates on the progress made in achieving our economic recovery plan.
Measurable Outcome – Maintaining Accountability for Core Government Expenditure and Revenue
Legislation requires Government to include a summary of Core Government expenditure and projected revenue as part of the FMS. This is consistent with the main estimates of expenditure and revenue for the fiscal year.
While core expenditure exceed core revenue in Budget 2010, our five-year economic plan shows this reversing by Budget 2014. The projection includes allocations from the Fiscal Stabilization Account for funding from the federal government for health wait-times and ecoTrust funding as well as for incremental debt servicing costs resulting from the Core Government shortfall.
Core Government Expenditure and Revenue, 2010/11
         
    $ Millions  
Revenue
    10,218  
Expenditure
    10,755  
 
     
 
    (537 )
Transfer from Fiscal Stabilization Account
       
Wait-time Reduction Programming
    25  
ecoTrust
    8  
Debt Servicing Costs
    6  
 
     
Net Result
    (498 )
 
     
Year-end information on Core Government revenue and expenditure for 2010/11 will be provided as part of the FMS report on outcomes, scheduled to be released in the fall of 2011.

 


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12 / BUDGET 2010

 
n   PRIORITY AREA – STABLE AND AFFORDABLE GOVERNMENT
Manitoba’s Government continues to be one of the most cost-effective governments in Canada. Keeping programs affordable is done by continuing to improve the way Government operates and delivers services.
Manitoba uses public revenues effectively and efficiently to deliver affordable Government programs and services. Manitoba’s per capita spending growth over the last decade has been the second lowest of all provincial governments. The most recent data for 2008/09 show that our per capita spending is fourth lowest in Canada.
In this challenging economic climate, the Government will continue to carefully manage programs and services within existing resources.
Measurable Outcome – Credit Ratings
Manitoba continues to maintain its reputation for fiscal responsibility. The Province’s measured approach to paying down debt and the pension liability, while dealing with the needs in health care and other program areas, has been positively acknowledged by credit rating agencies.
This is reflected in the credit rating upgrades Manitoba received from Moody’s Investors Service and Standard & Poor’s through 2007, and through the reaffirmations of Manitoba’s credit quality by rating agencies in 2008 and 2009.
During this period of international economic and financial instability, Manitoba’s stable and diversified economy, strong financial position and commitment to responsible financial management will help ensure a steady credit outlook in 2010. The credit rating agencies are aware of the challenging economic conditions facing all Canadian provinces. Our five-year plan includes a plan to repay debt while restoring balance. The implementation of the economic recovery plan is expected to result in credit ratings remaining unchanged for 2010.
The Manitoba Government remains committed to maintaining fiscal responsibility to achieve stable or improving credit ratings into the future.
                             
Credit   2004   2005   2006   2007   2008   2009   2010
Rating Agency   Actual   Actual   Actual   Actual   Actual   Actual   Projected
DBRS
  A(high)   A(high)   A(high)   A(high)   A(high)   A(high)   A(high)
Moody’s
  Aa2   Aa2   Aa2   Aa1   Aa1   Aa1   Aa1
Standard & Poor’s
  AA-   AA-   AA-   AA-(positive)   AA   AA   AA
NOTE: As at March 31 (end of fiscal year)

 


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BUDGET 2010 / 13

 
Measurable Outcome — Expenditures as a Percentage of Gross Domestic Product (GDP)
Maintaining stable and affordable government means managing the growth in spending to meet increasing demands for quality services in areas such as health, education and training. An effective measure of appropriate spending is the ratio of total expenditure as a percentage of GDP. This ratio has remained relatively stable over the last four years and is expected to remain within this range for Budget 2010.
Expenditure to GDP ratios are reflected in the following table and as part of Appendix 1, Summary Financial Statistics.
                                                         
    2005/06     2006/07     2007/08     2008/09     2009/10     2010/11     2011/12  
    Actual     Actual     Actual     Actual     Forecast     Budget     Projection  
Core Government Programs
    19.1 %     18.6 %     18.5 %     19.2 %     20.5 %     19.9 %     19.4 %
Other Reporting Entities
    3.7 %     3.9 %     4.1 %     3.7 %     4.0 %     4.1 %     4.0 %
Debt Servicing Costs
    2.1 %     1.8 %     1.8 %     1.6 %     1.5 %     1.5 %     1.5 %
Total Expenditures
    24.9 %     24.2 %     24.3 %     24.5 %     26.0 %     25.4 %     24.9 %
The Manitoba Government’s objective is to maintain a stable or declining ratio over the longer term.
Measurable Outcome — Strengthening the Management of Public Resources
Sound management and use of public resources are key to making government more effective. Government has made sure that public spending remains under control and that tax dollars are used effectively and efficiently.
For Budget 2010, general salary and discretionary operating costs were carefully reviewed by departments to absorb as many price and volume increases as possible while managing vacancies. As a result, half of the departments in Core Government will see a budget decrease in 2010/11. Overall, general salary costs have been held flat in 2010/11 compared to the 2009/10 voted authority and discretionary operating expenditures are 1.2% lower in Budget 2010 compared to Budget 2009.
The Government has also implemented reforms with other reporting entities to better manage public resources, capitalize on synergies and enhance regional capabilities, expertise and talent.
The Government supports continuous internal review and reform to provide Manitobans with affordable, innovative and effective public service operations, programs and services. The Government will continue to emphasize reforms that improve efficiency, accountability and transparency, three important goals of modern government.

 


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14 / BUDGET 2010

 
n   PRIORITY AREA — MANAGING DEBT
In the last decade, Government has implemented many specific initiatives to ensure sound fiscal management. These include:
  addressing the unfunded pension liability;
 
  funding the employer’s share of current service pension entitlements; and
 
  ensuring all capital investments are amortized and all related costs are fully reflected in annual appropriations for Core Government.
Since 1999, the Government has contributed almost $1 billion to the debt retirement account to address general purpose debt and pension obligations. Budget 2010 includes a further addition of $180 million for the CSSF. Borrowing funds to pay down the previously unfunded pension liability is a sound fiscal decision, as over the longer term, the cost of borrowing is less than the actuarially determined expected rate of return on the plan assets and the rate of growth in the pension liability. In addition, Budget 2010 includes $142 million in Core Government expenditures for the employer’s share of current service pension obligations.
Based on projections, Core Government will have a total of $5.1 billion in capital asset investments as of March 31, 2010, and $1.9 billion of related debt will have been retired through accumulated amortization. The balance will be repaid over the remaining useful life of these assets.
The debt retirement schedule is consistent with the period of amortization which reflects the service life of those assets. A total of $155 million for amortization of capital investment has been included in Core Government for 2010/11.
Measurable Outcome — Debt Retirement
In the last decade, Government established and implemented a balanced plan to retire the general purpose debt and to eliminate the pension liability.
Direct action has been taken to address the unfunded pension liability. This includes putting part of the annual debt retirement payment toward pension obligations, as well as funding the employer’s share of current service entitlements for all employees. Both of these steps are important to ensure sound fiscal management.
Significant provincial investments in infrastructure spending allowed the Government to take advantage of the federal government’s one-time infrastructure stimulus initiatives. While these investments support the economy through job creation and training opportunities there is an impact on the net debt.
However, asset costs are amortized over a set period that represents the useful life of the asset as required by GAAP. These set periods result in regular payment of the debt. The end result is increased infrastructure investment for Manitobans while spreading the cost of those assets over their useful life, a strategy which includes a plan to pay the debt.
Manitoba’s Five-Year Economic Plan includes using an estimated $600 million of the funds set aside in the FSA to fund amortization repayments and the interest expense on borrowings needed to fund the operating shortfall during this period of recovery.
Existing funds in the Debt Retirement Account will be used immediately to repay $145 million of debt. In addition, by the time the Government returns to a surplus position in Budget 2014, a further $440 million of the new debt will have been retired, an amount which exceeds what the current legislation would have required.
With a return to surplus position in Budget 2014, scheduled debt payments for general purpose debt from current resources will resume.

 


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BUDGET 2010 / 15

 
Under the five-year plan, approximately 30% of the new debt incurred as a result of the economic downturn will have been repaid by the time Manitoba returns to a surplus position. Funds prepaid by the federal government will continue to be transferred from the FSA for specific programs.
The Government continues to streamline debt management. This is reflected not only in the debt retirement plan, but also in the fact that debt servicing costs as a percentage of revenue has declined. Since 1999/2000, the debt servicing cost rate has dropped by 54.5%, from 13.2¢ of every dollar of summary revenue collected to a forecasted level of 6.0¢ in Budget 2010.
The Government’s continuing focus on plans to retire debt is based on the ultimate goal of eliminating the general purpose debt and the remaining unfunded pension liabilities. Although the impact of the global economic downturn has meant slower timelines, the Government remains committed to reducing debt over time.
Measurable Outcome — Net Debt to GDP Ratio
Net debt is an important indicator of a government’s financial position, as this highlights how government services will remain affordable in the future.
Manitoba Net Debt to GDP Ratio
(PERFORMANCE GRAPH)

f - Forecast b - Budgeted
Note: Dates are for the fiscal year ending March 31
Source: Manitoba Finance
Summary net debt is financial assets (such as cash or investments) minus total liabilities (such as loans or financing). It is the remaining liability that must be financed by future revenues.
Net debt may grow from time to time, as needed investments in capital assets — like the Manitoba Floodway, highway infrastructure and economic stimulus investments — are made. These forward-looking investments help support Manitoba’s economy.
Therefore, it is important to measure changes in net debt against the growth of the economy, as measured by the nominal GDP.
Over the last several years, the Manitoba Government has seen a substantial downward trend in the net debt to GDP ratio, lowering the ratio to a projected level of 24.4% in 2009/10 from 32.9% in 1999/2000, while continuously making much needed investments in Manitoba infrastructure.
In February 2010, Moody’s acknowledged that all Canadian provinces will likely experience a brief increase in the net debt to GDP levels given the investment in stimulus infrastructure and tightening of revenues.
Manitoba’s ratio will likely rise as the Government makes needed investments. As a result of the Government’s projected investment of $1.3 billion in infrastructure and capital asset renewal projects in 2009/10, and $1.8 billion in 2010/11 to create jobs and stimulate the economy, the net debt to GDP ratio is forecast to increase to 26.8% in Budget 2010. The five-year plan projects the return to a downward trend as the Government remains committed to reducing the net debt to GDP ratio over the longer term.

 


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16 / BUDGET 2010

 
n   PRIORITY AREA — INFRASTRUCTURE AND CAPITAL ASSET RENEWAL
Building and upgrading Manitoba’s infrastructure has been a priority for the Government since 1999. The Government reinforced this priority by announcing a four-year, $4.7 billion infrastructure plan in November 2008 to fund key infrastructure projects that create jobs and training opportunities across the province.
Measurable Outcome — Capital Investments
Based on principles of sound financial management, Manitoba has been able to increase the assets of the province while maintaining a manageable level of debt. Since 2000, the Government has invested $7.3 billion in public capital assets, including $2.7 billion for new or renewed hospitals, universities, colleges and public schools, $2.6 billion to upgrade Manitoba’s roads and highways and $2.0 billion for the Manitoba Floodway, the modernization and improvement of social housing, improving public service buildings, parks and camping infrastructure.
It is estimated that the insured or replacement value of these investments is more than $36 billion.
Budget 2010 provides the resources to continue upgrading Manitoba’s roads and highways, wastewater treatment plants, health facilities across the province, building and restoring much needed social housing and modernizing our schools and post-secondary institutions.
To continue this trend, major capital expenditure cash flow anticipated in 2010/11 includes:
         
    $ Millions  
Roads and Highways (including preservation)
    590  
Universities, Colleges and Public Schools
    271  
Health Facilities
    283  
Manitoba Floodway Expansion and Water Related Infrastructure
    101  
Housing (including third-party contributions)
    281  
Assistance to Third Parties
    137  
Public Service Buildings
    119  
Parks and Campground Infrastructure
    16  
 
     
 
    1,798  
 
     
Manitoba’s commitment to infrastructure investments and renewal of existing assets, while maintaining a fiscally responsible approach to budgeting and debt management, will continue to deliver benefits to Manitobans.

 


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BUDGET 2010 / 17

 
n   PRIORITY AREA — PERFORMANCE MEASUREMENT
Improving the way government measures both financial and non-financial performance outcomes enhances both transparency and accountability. Outcomes-based reporting provides information on the actual impacts, benefits or changes experienced as a result of a program or government service.
The 2009 FMS confirmed the eight principles which guide measurement and reporting for Government departments and major Crown corporations:
1.   The organization’s public purpose is explained.
 
2.   The organization’s priorities relate to overall Government priorities.
 
3.   Each organizational priority has objectives and actions to achieve them.
 
4.   Measures are developed with outcomes in mind, focussing on a few critical aspects of performance.
 
5.   Financial and non-financial information are linked.
 
6.   The strategic context for the plan and reported results is discussed.
 
7.   Performance information looks forward and backward in time.
 
8.   Information is clear, relevant, credible and balanced.
Measurable Outcome — Continued Development of Performance Measurement Capacity
Manitoba is committed to continuing progress on the measurement of performance outcomes.
Key performance measures will continue to be included in every Government department’s annual report. Performance reporting information is also included in the annual reports, and various specialized reports, of many other entities in the GRE.
In 2010/11, Manitoba will continue to develop performance measurement practices to strengthen management of department resources. There will be an increased emphasis on the use of performance measurement to support management decision making. Training courses and workshops will be strengthened to provide staff with more tools to develop and use performance measures more effectively. Work will also continue on the development of a community of practice to provide opportunities for collaboration and peer review of performance measurement activities across departments.

 


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18 / BUDGET 2010

 

 


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BUDGET 2010 / 19

 
APPENDIX 1
MANITOBA SUMMARY FINANCIAL STATISTICS

 


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20 / BUDGET 2010
 
Manitoba Summary Financial Statistics
                                                 
    2010/11     2009/10     2008/09     2007/08     2006/07     2005/06  
    Budget     Forecast     Actual     Actual     Actual     Actual  
                    (Millions of Dollars)                  
SUMMARY FINANCIAL STATEMENTS
                                               
Revenue
                                               
Income Taxes
    2,667       2,654       2,841       2,652       2,441       2,322  
Other Taxes
    3,385       3,248       3,252       3,198       3,043       2,228  
Fees and Other Revenue
    1,635       1,621       1,757       1,628       1,502       1,710  
Federal Transfers
    4,126       4,072       3,866       3,597       3,320       3,103  
Net Income of Government Business Enterprises
    699       687       807       947       627       959  
Sinking Funds and Other Earnings
    208       220       296       384       423       406  
 
                                   
Total Revenue
    12,720       12,502       12,819       12,406       11,356       10,728  
 
                                   
Expenditure
                                               
Health and Healthy Living
    5,085       4,851       4,593       4,235       3,960       3,813  
Education
    3,420       3,240       3,104       3,179       2,906       2,275  
Family Services and Consumer Affairs
    1,326       1,321       1,196       1,098       1,032       972  
Community, Economic and Resource Development
    1,819       1,834       1,752       1,579       1,433       1,674  
Justice and Other General Expenditures
    848       1,072       874       893       747       740  
Debt Servicing Costs
    767       739       830       864       793       860  
 
                                   
Total Expenditure
    13,265       13,057       12,349       11,848       10,871       10,334  
 
                                   
Net Income (Loss)
    (545 )     (555 )     470       558       485       394  
 
                                   
Provincial Borrowings, Guarantees & Obligations
                                               
General Government Programs
    7,093       6,824       6,321       6,383       6,564       6,583  
General Government Programs — Pension Liability
    2,355       2,175       1,850       1,500       0       0  
Manitoba Hydro
    8,574       7,856       7,575       6,796       6,636       6,524  
Other Crown Organizations
    1,587       1,487       1,341       1,269       1,279       1,272  
Health Facilities
    1,182       958       831       833       790       767  
Government Enterprises and Other
    58       68       78       92       150       163  
Capital Investments
    2,571       1,847       1,411       1,084       749       464  
 
                                   
Subtotal
    23,420       21,215       19,407       17,957       16,168       15,773  
 
                                               
Other Obligations
                                               
Pension Liability
    6,565       6,373       6,150       5,881       5,652       5,091  
Pension Asset
    (4,777 )     (4,560 )     (4,147 )     (3,653 )     (2,159 )     (1,628 )
 
                                   
Net Pension Liability
    1,788       1,813       2,003       2,228       3,493       3,463  
Debt incurred for and repayable by The Manitoba Hydro- Electric Board and The Manitoba Lotteries Corporation
    (8,564 )     (7,761 )     (7,349 )     (6,629 )     (6,163 )     (6,276 )
Education and Health Debt held by Government Enterprises
    466       436       406       416       383       339  
Other Debt of Crown Organizations
    397       397       405       413       233       253  
 
                                   
Subtotal
    (5,913 )     (5,115 )     (4,535 )     (3,572 )     (2,054 )     (2,221 )
 
                                   
Total Summary Borrowings, Guarantees and Obligations
    17,507       16,100       14,872       14,385       14,114       13,552  
 
                                   
Adjustments to arrive at Summary Net Debt
                                               
Guarantees
    (170 )     (255 )     (402 )     (352 )     (675 )     (491 )
Net Financial Assets
    (3,342 )     (3,592 )     (2,972 )     (3,434 )     (2,582 )     (2,053 )
 
                                   
Summary Net Debt
    13,995       12,253       11,498       10,599       10,857       11,008  
 
                                   
Summary Net Debt as percentage of GDP
    26.8       24.4       22.8       21.8       24.1       26.5  
Numbers may not add due to rounding.
NOTES:
  Actual numbers for summary expenditures for 2005/06 and earlier do not include public schools as this information is not available in a GAAP format. The above results and the statistics associated with these results would change if public schools were included.
 
  The 2009/10 Forecast has been restated from the Third Quarter Financial Report, to be consistent with Budget 2010 presentation.
 
  Revenue and Expenditure numbers for 2008/09 and earlier have been restated to be consistent with the current presentation for the Government Reporting Entity.

 


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BUDGET 2010 / 21
 
Manitoba Summary Financial Statistics
                                                 
    2010/11   2009/10   2008/09   2007/08   2006/07   2005/06
    Budget   Forecast   Actual   Actual   Actual   Actual
                    (Percentage Change)                
Annual Change
                                               
Income Taxes
    0.5       (6.6 )     7.1       8.6       5.1       3.5  
Other Taxes1
    4.2       (0.1 )     1.7       5.1       36.6       3.1  
Fees and Other Revenue
    0.9       (7.7 )     7.9       8.4       (12.2 )     18.8  
Federal Transfers
    1.3       5.3       7.5       8.3       7.0       (1.7 )
Total Revenue
    1.7       (2.5 )     3.3       9.2       5.9       5.7  
Health and Healthy Living
    4.8       5.6       8.5       6.9       3.9       7.0  
Education
    5.6       4.4       (2.4 )     9.4       27.7       (0.8 )
Debt Servicing Costs
    3.8       (11.0 )     (3.9 )     9.0       (7.8 )     5.1  
Total Expenditure
    1.6       5.7       4.2       9.0       5.2       7.8  
Summary Net Debt
    14.2       6.6       8.5       (2.4 )     (1.4 )     2.7  
 
                                               
 
                  (Percent)                
Per cent of GDP
                                               
Income Taxes
    5.1       5.3       5.6       5.4       5.4       5.6  
Other Taxes1
    6.5       6.5       6.5       6.6       6.8       5.4  
Fees and Other Revenue
    3.1       3.2       3.5       3.3       3.3       4.1  
Federal Transfers
    7.9       8.1       7.7       7.4       7.4       7.5  
Total Revenue
    24.4       24.9       25.5       25.5       25.3       25.8  
Health and Healthy Living
    9.7       9.7       9.1       8.7       8.8       9.2  
Education
    6.6       6.5       6.2       6.5       6.5       5.5  
Debt Servicing Costs
    1.5       1.5       1.6       1.8       1.8       2.1  
Total Expenditure
    25.4       26.0       24.5       24.3       24.2       24.9  
Summary Net Debt
    26.8       24.4       22.8       21.8       24.1       26.5  
 
                                               
Per cent of Revenue
                                               
Income Taxes
    21.0       21.2       22.2       21.4       21.5       21.6  
Other Taxes1
    26.6       26.0       25.4       25.8       26.8       20.8  
Fees and Other Revenue
    12.9       13.0       13.7       13.1       13.2       15.9  
Federal Transfers
    32.4       32.6       30.2       29.0       29.2       28.9  
Net Income of Government Business Enterprises
    5.5       5.5       6.3       7.6       5.5       8.9  
Sinking Funds and Other Earnings
    1.6       1.8       2.3       3.1       3.7       3.8  
 
                                               
 
                  (Dollars)                
Dollars Per Capita
                                               
Total Revenue
    10,306       10,231       10,628       10,391       9,591       9,105  
Total Expenditure
    10,748       10,685       10,239       9,924       9,182       8,770  
Debt Servicing Costs
    621       605       688       724       670       730  
Summary Net Debt
    11,339       10,027       9,533       8,878       9,170       9,342  
 
                                               
Memorandum Items
                                               
Population (000’s)*
    1,234.2       1,222.0       1,206.1       1,193.9       1,184.0       1,178.3  
GDP at Market Prices
    52,158       50,200       50,324       48,727       44,957       41,512  
 
Source: Manitoba Finance
 
1   Other Taxes for 2005/06 and earlier do not include property taxes charged by public school divisions.
 
*   official population July 1

 


Table of Contents

Budget Paper B
 

SUPPLEMENTARY
FINANCIAL INFORMATION
(MANITOBA LOGO)

 


Table of Contents

SUPPLEMENTARY FINANCIAL INFORMATION
 
CONTENTS

 


Table of Contents

BUDGET 2010 Supplementary Financial Information / B1
 
n SPECIAL ACCOUNTS
Fiscal Stabilization Account
The Fiscal Stabilization Account (FSA) is projected to have a balance of $804 million at March 31, 2010, after a draw of $47 million for wait-time reduction and other health-related programming and $13 million related to ecoTrust funded projects.
The budgeted draw in 2010/11 includes $25 million for wait-time reduction programming and $8 million for ecoTrust projects, funds prepaid by Canada in previous years. As part of Manitoba’s five-year plan, beginning in 2010/11, the FSA will be utilized to retire a portion of the borrowings and incremental interest costs incurred during the period of recovery to support core government programs. The 2010/11 draw for this purpose is $96 million.
Fiscal Stabilization Account
Revenue, Expenditure and Balance
Projection as at March 31, 2011 and March 31, 2010
Millions of Dollars
                 
    2010/11     2009/10  
    Budget     Forecast  
Total Account Balance, Beginning of Year
    804       864  
 
           
Health Programs
               
Balance,Beginning of Year
    57       104  
Core Government Transfers
               
Wait-Time Reduction Programming and Other Health Related Programming
    (25 )     (47 )
 
           
Balance,End of Year
    32       57  
 
           
General Programs
               
Balance,Beginning of Year
    747       760  
Core Government Transfers
               
ecoTrust
    (8 )     (13 )
Debt Repayment and Incremental Debt Servicing Costs
    (96 )      
 
           
Balance,End of Year
    643       747  
 
           
Total Account Balance, End of Year
    675       804  
 
           

 


Table of Contents

B2 / Supplementary Financial Information BUDGET 2010
 
Debt Retirement Account
The Debt Retirement Account will be collapsed in 2010/11 with the entire balance of $145 million being utilized as part of Manitoba’s five-year plan to repay general purpose debt.
Debt Retirement Account
Revenue, Expenditure and Balance
Projection as at March 31, 2011 and March 31, 2010
Millions of Dollars
                 
    2010/11     2009/10  
    Budget     Forecast  
Account Balance, Beginning of Year
    145       134  
Revenue
               
Core Government Transfer
          20  
Interest
          1  
 
           
 
          21  
 
           
Expenditure
               
Transfer to Pension Assets Fund
          (10 )
Transfer for General Purpose Debt Reduction
    (145 )      
 
           
 
    (145 )     (10 )
 
           
Account Balance, End of Year
          145  
 
           

 


Table of Contents

BUDGET 2010 Supplementary Financial Information / B3
 
Pension Assets Fund
The Government continues its commitment to fund the Province’s unfunded pension liabilities. As part of this commitment, the Province has changed the trust conditions of the funds held in the Pension Assets Fund to clarify that these funds are irrevocably restricted for pension purposes only. Net investment earnings of pension assets include the expected rate of return during the year as well as adjustments to market-related value. Market fluctuations of pension assets are not recorded in the year in which they occur but are recognized over the employee average remaining service life.
The Fund is expected to increase as a result of the Government’s plan to set aside $180 million in 2010/11 in order to continue addressing the Province’s unfunded liability for the Civil Service Superannuation Fund.
The Fund is expected to have a balance of $3,150 million by the end of the 2010/11 fiscal year.
Pension Assets Fund
Projection as at March 31, 2011 and March 31, 2010
Millions of Dollars
                 
    2010/11     2009/10  
    Budget     Forecast  
Balance, Beginning of Year
    2,949       2,608  
 
           
Contributions and Revenue
               
 
               
New Investment
    180       330  
Debt Retirement Fund
          10  
Net Investment Earnings
    115       95  
Departments and Crown Corporations
    142       136  
 
           
 
    437       571  
 
           
Transfers
               
TRAF and CSSF payments
    (236 )     (230 )
 
           
 
               
Balance, End of Year
    3,150       2,949  
 
           

 


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B4 / Supplementary Financial Information BUDGET 2010
 
SUMMARY OF ACCOUNT/FUND ACTIVITY
                                                                 
    2010/11   2009/10   2008/09   2007/08   2006/07   2005/06   2004/05   2003/04
    Budget   Forecast   Actual   Actual   Actual   Actual   Actual   Actual
    (Millions of Dollars)
Fiscal Stabilization Account
                                                               
 
                                                               
Transfers to Account
                30       128       110       31       405       13  
Transfers from Account
    (129 )     (60 )                                   (171 )
Redemption of Repap Preferred Shares
                                                               
Transfer re: Manitoba Telephone System
                                                               
Investment Revenue
                16       27       21       15       2       1  
Balance, End of Year
    675       804       864       818       663       532       486       79  
 
                                                               
Debt Retirement Account
                                                               
 
                                                               
Contribution
          20       110       110       110       110       99       96  
Interest Earnings
          1       1       2       1             2       7  
Transfers to Pension Assets Fund
          (10 )     (55 )     (85 )     (85 )     (85 )     (79 )     (75 )
Transfers for General Purpose Debt Reduction
    (145 )                                             (202 )        
Balance, End of Year
          145       134       78       51       25             180  
 
                                                               
Pension Assets Fund
                                                               
 
                                                               
Transfers from Debt Retirement Account
          10       55       85       85       85       79       75  
Net Investment Earnings
    115       95       41       16       67       61       31       38  
Net Current Service Contributions
    (94 )     (94 )     (80 )     (60 )     10       8       6       3  
TRAF and CSSF Funding
    180       330       350       1,502                                  
Balance, End of Year
    3,150       2,949       2,608       2,242       699       537       383       267  

 


Table of Contents

BUDGET 2010 Supplementary Financial Information / B5
 
                                                                 
2002/03     2001/02     2000/01     1999/00     1998/99     1997/98     1996/97     1995/96  
Actual     Actual     Actual     Actual     Actual     Actual     Actual     Actual  
                        (Millions of Dollars)                          
                                                               
Fiscal Stabilization Account
  4       63       40       11       31       76       91       157    
Transfers to Account
  (22 )     (150 )           (185 )     (186 )     (100 )              
Transfers from Account
                                                          20    
Redemption of Repap Preferred Shares
                                                  265            
Transfer re: Manitoba Telephone System
  7       14       15       12       17       11       11       3    
Investment Revenue
  236       247       320       265       427       565       577       210    
Balance, End of Year
 
                                                               
Debt Retirement Account
  96       96       96       75       150       75                
Contribution
  3       5                   4       1                    
Interest Earnings
  (48 )     (75 )     (21 )                                    
Transfers to Pension Assets Fund
                          (305 )                                  
Transfers for General Purpose Debt Reduction
  152       101       75             230       76                    
Balance, End of Year
 
                                                               
Pension Assets Fund
  48       75       21                                            
Transfers from Debt Retirement Account
  (6 )     2                                                  
Net Investment Earnings
  2       9                                                  
Net Current Service Contributions
                                                               
TRAF and CSSF Funding
  151       107       21                                            
Balance, End of Year

 


Table of Contents

B6 / Supplementary Financial Information BUDGET 2010
 
n CAPITAL INVESTMENT – REPLACEMENT VALUE OF PUBLIC ASSETS
Over the years, Manitoba’s communities and the economy have benefited from many investments in general assets such as schools, health facilities and public service buildings as well as infrastructure assets such as roads, water-control structures and parks. To meet the needs of today’s and future generations, it is necessary to invest in renewal of the current assets. These assets have contributed to vital public services, as well as providing the infrastructure for economic and community development. The public good provided by these investments is immeasurable. It is estimated that the insured or replacement value of these investments exceeds $36 billion.
Replacement Value of Public Assets1
Per cent of Total
(PIE CHART)
Totals may not add due to rounding.

 


Table of Contents

BUDGET 2010 Supplementary Financial Information / B7
 
n CAPITAL INVESTMENT – CORE GOVERNMENT
Provincially owned capital assets such as highways, waterways, buildings, machinery and computer systems are amortized over their useful life based on established guidelines for amortization (see Appendix B of the 2010/11 Estimates of Expenditure). The amortization and interest costs are borne by departments that are responsible for each asset and are reflected as annual costs related to capital assets. In total, costs related to capital assets are estimated at $280 million in 2010/11, an increase of $28 million from 2009/10. In 2010/11, departmental appropriations include $155 million for amortization and $125 million for allocation of interest.
Authority for the annual cost to acquire provincially owned assets is reflected as Part B – Capital Investment which totals $797 million in 2010/11, an increase of $43 million from 2009/10, largely due to $62 million for increased investment in provincially owned buildings and aircraft.
Capital Investment, 2010/11
(Thousands of Dollars)
                 
    2010/11     2009/10  
    Budget     Budget*  
General Assets
               
Government Services Capital Projects
    160,482       125,000  
Transportation Equipment and Aircraft
    58,814       32,037  
Information Technology Projects
               
Corporate Information Technology Projects
    11,311       14,978  
Advanced Education and Literacy
    6,162       3,600  
Entrepreneurship, Training and Trade
    3,146       789  
Family Services and Consumer Affairs
    613       855  
Health
    527       3,241  
Justice
    1,422       1,205  
Other Projects
          262  
Other Equipment and Buildings
    6,722       4,847  
 
           
 
               
 
    249,199       186,814  
 
           
Infrastructure Assets
               
Provincial Roads, Highways and Airport Infrastructure
    367,075       366,725  
Manitoba Floodway Expansion
    153,565       172,846  
Water Control Infrastructure
    10,600       10,600  
Parks, Cottage and Camping Projects
    16,757       16,757  
 
           
 
    547,997       566,928  
 
           
Total Capital Investment
    797,196       753,742  
 
           
 
*   The 2009/10 Budget has been restated to be consistent with the 2010/11 Budget presentation.

 


Table of Contents

B8 / Supplementary Financial Information BUDGET 2010
 
n LOAN REQUIREMENTS
The Loan Act provides borrowing and expenditure authority and, in some cases, guarantee authority for the Government and its agencies to undertake self-sustaining programs, where self-sustaining means having the ability for repayment. This authority is in addition to that voted in the printed estimates review.
Incremental Capital Authority Requirements for Non-Budgetary Programs, 2010/11
(Thousands of Dollars)
         
The Loan Act, 2010
       
The Manitoba Hydro-Electric Board
  $ 815,000  
Health Capital Program
    273,459  
Post-Secondary Institutions
    174,050  
Manitoba Housing and Renewal Corporation
    143,796  
Manitoba Agricultural Services Corporation
    89,957  
The Manitoba Water Services Board
    29,904  
The Manitoba Lotteries Corporation
    14,300  
Special Operating Agencies Financing Authority — Vehicles and Equipment Management Agency
    13,000  
Manitoba Student Aid Program
    10,347  
Northern Affairs Communities
    8,900  
Communities Economic Development Fund
    6,800  
Diagnostic Services Manitoba
    5,096  
Special Operating Agencies Financing Authority — Industrial Technology Centre
    1,160  
Rural Entrepreneur Assistance Program
    817  
Special Operating Agencies Financing Authority — Vital Statistics
    547  
Special Operating Agencies Financing Authority — Pineland Forest Nursery
    435  
Manitoba Film Guarantee Program
    200  
 
     
 
  $ 1,587,768  
 
     

 


Table of Contents

BUDGET 2010 Supplementary Financial Information / B9
 
Non-Budgetary Programs, 2010/11
(Thousands of Dollars)
         
The Manitoba Hydro-Electric Board
  $ 1,345,000  
Health Capital Program
    293,104  
Manitoba Housing and Renewal Corporation
    267,904  
Post-Secondary Institutions
    181,293  
Manitoba Agricultural Services Corporation
    112,025  
The Manitoba Lotteries Corporation
    71,600  
Manitoba Opportunities Fund
    60,000  
The Manitoba Water Services Board
    55,800  
Business Support (including Manitoba Industrial Opportunities Program)
    45,600  
Special Operating Agencies Financing Authority — Vehicles and Equipment Management Agency
    37,256  
Diagnostic Services Manitoba
    30,750  
Manitoba Student Aid Program
    28,291  
Northern Affairs Communities
    10,500  
Communities Economic Development Fund
    9,000  
Rural Entrepreneur Assistance Program
    4,320  
Miscellaneous Corporations, Agencies and Other Programs
    18,458  
 
     
 
  $ 2,570,901  
 
     

 


Table of Contents

B10 / Supplementary Financial Information BUDGET 2010
 
n   BORROWING REQUIREMENTS
Manitoba’s borrowing requirements in respect of both general and self-sustaining borrowings is estimated to total $3.4 billion in 2010/11, of which $1.3 billion is required for refinancing purposes. New cash requirements of $2.4 billion are required for general Government purposes, capital investments by departments, Manitoba Hydro and for the funding of the unfunded pension liability for the Civil Service Superannuation Plan. Estimated repayments are primarily for general purpose borrowings. The Loan Act, 2010, provides incremental capital authority of $1.6 billion.
Borrowing Requirements 2010/11
(Thousands of Dollars)
                                 
            New Cash     Estimated     Borrowing  
    Refinancing     Requirements     Repayments     Requirements  
Government Business Enterprises
                               
Manitoba Hydro
    390,800       816,000             1,206,800  
Manitoba Lotteries
          50,000             50,000  
 
                       
Subtotal
    390,800       866,000             1,256,800  
 
                       
 
                               
Other Borrowings
                               
General Purpose Borrowings
    862,635       537,000       268,000       1,131,635  
Capital Investment General Assets
            97,400             97,400  
Capital Investment Infrastructure Assets
    33,958       626,600             660,558  
Civil Service Superannuation Plan
          180,000             180,000  
Health Facilities
          100,000       70,470       29,530  
Other Crowns and Organizations
          50,000             50,000  
 
                       
Subtotal
    896,593       1,591,000       338,470       2,149,123  
 
                       
Total Borrowing Requirements
    1,287,393       2,457,000       338,470       3,405,923  
 
                       

 


Table of Contents

BUDGET 2010 Supplementary Financial Information / B11
 
n   SUMMARY NET DEBT
Change in Summary Net Debt
(Millions of Dollars)
         
2009/10 Summary Net Debt (forecast)
    12,253  
 
       
Net Investment in Tangible Capital Assets
       
Core Government
    642  
Other Reporting Entities
    555  
 
     
 
    1,197  
 
     
Plus: Net projected loss for the year
       
Core Government
    498  
Other Reporting Entities
    47  
 
     
 
    545  
 
     
 
       
Change in Net Debt
    1,742  
 
     
 
       
2010/11 Summary Net Debt (Budget)
    13,995  
 
     
Net debt is an important indicator of a government’s financial position as this highlights the affordability of future government service. Summary net debt represents the difference between the Government Reporting Entities’ total liabilities, such as borrowing and financing, less its financial assets* — it reflects the residual liability that must be financed by future revenues. Net debt may grow in absolute terms from time to time, as needed investments in capital assets — like the Red River Floodway, highway infrastructure and economic stimulus investments — are made. These investments underpin and support Manitoba’s economic performance. It is important to measure changes in net debt against the growth of the economy, as measured by the nominal GDP.
Net financial assets and summary net debt as a percentage of GDP include the projected impact of changes in Other Comprehensive Income (OCI). OCI is unrealized gains and losses due to the change in fair market value of financial instruments held by certain entities or on changes in the exchange rate of debt in a foreign currency.
Changes in OCI are based upon “mark-to-market” variances at year end and therefore, are a one-day snapshot of a change in value when compared to the same day in the previous year. While changes in OCI can have a significant impact on the net debt to GDP ratio, there is no impact on net income because OCI is an unrealized gain or loss and only reflects a change to the book value at the end of the year.
 
*   Financial assets are liquid assets such as cash, investments, loans and accounts receivable that could be readily converted to cash.
                         
                    Net Debt  
Fiscal Year   Net Debt     GDP     as a % of GDP  
2003/04 Actual
    11,595       37,314       31.0 %
2004/05 Actual
    11,101       39,490       28.1 %
2005/06 Actual
    11,008       41,512       26.5 %
2006/07 Actual
    10,857       44,957       24.1 %
2007/08 Actual
    10,599       48,727       21.8 %
2008/09 Actual
    11,498       50,324       22.8 %
2009/10 Forecast
    12,253       50,200       24.4 %
2010/11 Budget
    13,995       52,158       26.8 %

 


Table of Contents

B12 / Supplementary Financial Information BUDGET 2010
 
n INTERPROVINCIAL COMPARISONS
         
Total Provincial Expenditure Per Capita Increase, from 1990/00 to 2008/09
  Total Provincial Expenditure Per Capita, 2008/09   Provincial Government Expenditure on Health, 2009/10f
 
(BAR CHART)
  (BAR CHART)   (BAR CHART)
Source: Statistics Canada
  Source: Statistics Canada   f — Forecast
 
      Source: Canadian Institute for Health Information
Total Debt to GDP Ratio by Province, 2008/09p
  Major Federal Cash Transfers Change from 1999/2000 to 2010/11    
 
(BAR CHART)
  (BAR CHART)    
p — Preliminary
Source: DBRS
 
Note: This presentation includes Offshore Accord payments to NL and NS and total transfer protection payments announced in December 2009.
   
 
  Source: Finance Canada    

 


Table of Contents

Budget Paper C
 
TAXATION ADJUSTMENTS
INCLUDES
THE MANITOBA ADVANTAGE
(MANITOBA LOGO)

 


 

TAXATION ADJUSTMENTS
 
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Table of Contents

BUDGET 2010 Taxation Adjustments / C1
 
n SUMMARY OF 2010 TAX MEASURES
    A negative number represents a tax saving to the taxpayer.
                 
    2010/11     Full Year  
    (Millions of Dollars)  
Ongoing Reductions 1
               
Personal Tax reductions
    -0.5       -0.5  
Business Tax reductions
    -28.9       -40.0  
Farmland School Tax Rebate increase deferred 2
    2.0       2.0  
 
           
 
    -27.4       -38.5  
 
               
Personal Measures
               
Tuition Fee Income Tax Rebate Advance introduced
    -7.5       0.0 *
Fitness Tax Credit broadened
    -0.3       -1.2  
Fertility Treatment Tax Credit introduced
    -0.4       -0.8  
Changes Pursuant to the Tax Collection Agreement 3
    2.5       3.5  
 
           
 
    -5.7       1.5  
 
               
Health Measures
               
Tobacco Tax increased
    18.0       18.0  
Retail Sales Tax applied to Tanning Services
    0.6       0.8  
 
    18.6       18.8  
 
               
Business Measures
               
Research and Development Tax Credit enhanced
    -1.5       -12.0  
Co-op Education and Apprenticeship Tax Credits broadened
    -0.2       -2.1  
Changes Pursuant to the Tax Collection Agreement 3
    -0.2       -0.5  
Co-operative Development Tax Credit introduced
    -0.1       -0.2  
Credit Unions & Caisses Populaires Profits Tax introduced
    0.3       0.8  
Programs Extended:
               
Film and Video Production Tax Credit (and enhanced)
    0.0       -16.0  
Small Business Venture Capital Tax Credit 4
    -2.5       -10.0  
Interactive Digital Media Tax Credit
    -0.1       -0.1  
 
           
 
    -4.3       -40.1  
 
               
Total Changes, 2010 Budget
    8.6       -19.8  
 
               
Total Changes Including Ongoing Tax Reductions
    -18.8       -58.3  
 
*   This measure advances in time a portion of the total cost of the Rebate so there is no change to the full-year cost.
 
1   Ongoing tax reductions are those that were announced in previous budgets to take effect in 2010:
 
    (a) the increase in the Manitoba Mineral Exploration Tax Credit;
 
    (b) the elimination of the Small Business Corporation Income Tax rate;
 
    (c) the phase-out of the Corporation Capital Tax (excluding banks, trust and loan corporations and Crown corporations).
 
2   Expenditure program
 
3   Parallels 2010 Federal Budget changes pursuant to the Tax Collection Agreement
 
4   Formerly called the Community Enterprise Investment Tax Credit

 


Table of Contents

C2 / Taxation Adjustments BUDGET 2010
 
n PERSONAL MEASURES
Tuition Fee Income Tax Rebate Advance
(2010/11 revenue impact: $-7.5 million)
The Tuition Fee Income Tax Rebate, introduced in Budget 2007, provides a rebate of 60% of eligible post-secondary tuition fees to graduates who live and work in Manitoba. To help address the financial pressures faced by students and their families, students will qualify for a portion of the Rebate while they are still in school.
Beginning in 2010, students resident in Manitoba and attending a post-secondary institution can claim a Tuition Fee Income Tax Rebate Advance in the form of a refundable 5% tax credit on tuition and ancillary fees paid after August 31, 2010.
The tax credit is claimable by a student even if the tuition and education amount is transferred to a parent or spouse. There is an annual cap of $250 in 2010, and of $500 in following years, and a lifetime cap of $5,000 under the Advance. Amounts claimed as an Advance will reduce the lifetime maximum of $25,000 under the Rebate following graduation.
Where an individual is claiming a Rebate in a given year, they are not eligible to claim the Advance.
For more information, contact Location B, page C8
Fitness Tax Credit
(2010/11 revenue impact: $-0.3 million)
Currently, Manitoba’s Children’s Fitness Tax Credit applies to children up to and including age 15. Starting in 2011, the Fitness Tax Credit will be broadened to include claims for fitness activities by young adults ages 16 through 24. The annual cost of eligible fitness activities up to $500, as defined under the federal legislation, can be claimed by the young adult, or by a spouse or parent. This will provide an annual benefit of up to $54 per young adult. Young adults with a disability, on whose behalf at least $100 is spent for qualifying fitness activities, will be eligible for an additional $54 credit for a maximum tax credit of $108, as is currently the case for children. The credits reduce Manitoba income tax otherwise payable for a year.
The full-year revenue impact is estimated at $-1.2 million.
For more information, contact Location B, page C8
Fertility Treatment Tax Credit
(2010/11 revenue impact: $-0.4 million)
The Fertility Treatment Tax Credit is a refundable personal income tax credit equal to 40% of fertility treatment costs paid to an accredited clinic in Manitoba and for prescription drugs, net of any reimbursements such as private health care coverage, related to the treatment of a Manitoba resident. Up to $20,000 in annual eligible costs incurred and paid after September, 2010, may be claimed for a maximum credit of $8,000.
Eligible costs must be claimable as a medical expense under federal income tax rules. The Credit can be shared with a spouse or common law partner.
The full-year revenue impact is estimated at $-0.8 million.
For more information, contact Location B, page C8

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C3
 
n HEALTH MEASURES
Tobacco Tax
(2010/11 revenue impact: $18.0 million)
The Tobacco Tax is increased effective midnight, March 23, 2010. The rate will rise on cigarettes from 18.5¢ to 20.5¢ per cigarette; on fine-cut tobacco from 17.5¢ to 19.5¢ per gram; and on raw leaf tobacco from 16¢ to 18¢ per gram.
The full-year revenue impact of this tax increase is estimated at $18.0 million.
For more information, contact Location C, page C8
Retail Sales Tax — Tanning Services
(2010/11 revenue impact: $0.6 million)
Studies show that indoor tanning among people under the age of 30 increases the risk for skin cancer (melanoma) and the Canadian Dermatology Association has recently launched a campaign to raise awareness of the risks.
Effective July 1, 2010, retail sales tax will be applied to tanning services.
The full-year revenue impact of this tax measure is estimated at $0.8 million.
For more information, contact Location C, page C8
n BUSINESS MEASURES
Research and Development Tax Credit
(2010/11 revenue impact: $-1.5 million)
As announced in Budget 2009 and to promote co-operation between corporations and research institutes, the 20% Research and Development Tax Credit is fully refundable for scientific research and experimental development expenditures (R&D) carried on in Manitoba under an eligible contract with a qualifying research institute in Manitoba.
Budget 2010 extends refundability of this tax credit to in-house R&D expenditures (i.e. R&D not undertaken under contract with an institute in Manitoba) as follows:
  starting with 2011, one-quarter of the credit for in-house R&D will be refundable;
 
  starting with 2012, one-half of the credit for in-house R&D will be refundable.
The full-year revenue impact of these measures is $-12.0 million.
For more information, contact Location A, page C8

 


Table of Contents

C4 / Taxation Adjustments BUDGET 2010
 
Co-op Education and Apprenticeship Tax Credits
(2010/11 revenue impact: $-0.2 million)
The Co-op Education and Apprenticeship Tax Credits were introduced in 2003 to encourage employers to hire co-op education students from post-secondary institutions. They have been extended in stages to include co-op graduates, newly certified journeypersons and advanced level apprentices.
Starting in 2011, the tax credit is broadened to include employers who hire high-school and post-secondary Level 1 and 2 apprentices, but who are not eligible for the federal Apprenticeship Job Creation Tax Credit. This includes tax-exempt employers as well as taxable employers of non-Red-Seal apprentices. The Manitoba tax credit will be equal to 10% of net wages and salaries paid to an apprentice, up to a maximum $2,000 credit.
The full-year revenue impact is estimated at $-2.1 million.
For more information, contact Location F, page C8
Co-operative Development Tax Credit
(2010/11 revenue impact: $-0.1 million)
To grow the co-operative sector, a tax credit is introduced for co-operatives that make financial contributions toward co-operative development in Manitoba. Contributions to a fund managed by the Manitoba Cooperative Association will be used for the provision of technical assistance, the co-ordination of existing supports and services, and the provision of small grants and strategic investments.
Program details will be announced later in 2010. Contributions made after September 2010 will be eligible for the tax credit.
The full-year revenue impact of this tax credit is estimated at $-0.2 million.
For more information, contact Location A, page C8
Credit Unions and Caisses Populaires Profits Tax
(2010/11 revenue impact: $0.3 million)
Credit unions and caisses populaires are mainly taxed at the small business tax rate, regardless of how large they are. With the elimination of Manitoba’s small business income tax on December 1, 2010, credit unions and caisses populaires would become largely exempt from Manitoba income tax.
Commencing January 1, 2011, credit unions and caisses populaires with a permanent establishment in Manitoba will be subject to a 1% profits tax on taxable income in excess of $400,000. Profits will be defined as Manitoba taxable income as determined under federal income tax. The profits tax will be reduced by the amount of Manitoba income tax paid or payable in that year. A 1% tax on profits in excess of the small business limit of $400,000 will leave larger credit unions paying less tax than in 2010, but more than zero. Many smaller entities which in 2010 paid 1% on all their taxable income will now pay no Manitoba income or profits tax, due to the $400,000 exemption.
Where a credit union’s or caisse populaire’s taxation year straddles January 1, 2011, it will calculate profits proportioned by the number of days in that year following December 31, 2010.
Credit union centrals, caisses populaires federations and deposit guarantee corporations are exempt.

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C5
 
A profits tax return must be filed no later than six months after the end of a fiscal year. The profits tax will be collected and administered by Taxation Division, Manitoba Finance.
The full-year revenue impact of this measure is estimated at $0.8 million.
For more information, contact Location C, page C8
Film and Video Production Tax Credit
(2010/11 revenue impact: not applicable)
The Manitoba Film and Video Production Tax Credit, which was set to expire March 1, 2011, is extended to March 1, 2014.
Starting with productions which commence principal photography after March 2010, production companies will be able to elect to claim either the maximum 65% film tax credit based on eligible labour costs or a new 30% tax credit based on production costs incurred and paid for labour, goods and services provided in Manitoba that are directly attributable to the production of an eligible film. The revenue impact of this measure is estimated at $-1.7 million.
The following changes are also proposed, effective March 24, 2010:
  production companies may file Form T2029, Waiver in Respect of the Normal Reassessment Period, to extend their application deadline by 18 months;
 
  amendments to the governing legislation will be made to provide the Province with greater flexibility to make changes in response to external changes;
 
  federal limitation periods will be adopted for filing a Manitoba film tax credit certificate with the Canada Revenue Agency.
The full-year revenue impact of these measures is estimated at $-16.0 million.
For more information, contact Location D, page C8
Small Business Venture Capital Tax Credit
(2010/11 revenue impact: $-2.5 million)
The Community Enterprise Investment Tax Credit, which was set to expire December 31, 2010, is extended to December 31, 2013 and it is renamed the Small Business Venture Capital Tax Credit. The program will be amended to prioritize economic development in accordance with Provincial objectives. Additionally, administrative changes will be made that correspond to other tax credit programs.
The full-year revenue impact is estimated at $-10.0 million.
For more information, contact Location E, page C8

 


Table of Contents

C6 / Taxation Adjustments BUDGET 2010
 
Interactive Digital Media Tax Credit
(2010/11 revenue impact: $-0.1 million)
The Interactive Digital Media Tax Credit, which was set to expire December 31, 2010, is extended to December 31, 2013.
The following changes are also proposed, effective for certificates of eligibility and tax credit certificates issued after March 23, 2010:
  tax credit certificates can be issued on a taxation-year basis instead of at the end of a project;
 
  repaid or repayable government assistance will no longer reduce eligible labour costs; and
 
  where a government or public authority is the purchaser of an interactive digital media product, the amount paid by the purchaser and the amount of the Interactive Digital Media Tax Credit cannot exceed 100% of the project’s costs.
The full-year revenue impact is estimated at $-0.1 million.
For more information, contact Location G, page C8
n OTHER CHANGES
Farmland School Tax Rebate
(2010/11 expenditure impact: $-2.0 million)
In 2004, the Farmland School Tax Rebate was introduced as a 33% Provincial rebate of school division taxes on farmland. Since 2004 the rebate has increased to 75%. The scheduled increase to 80% in 2010 is deferred, with the rate remaining at 75% instead. At a 75% rate, the rebate will provide tax savings of $32.8 million for Manitoba’s farm community. The rebate does not reduce the amount of revenue collected by school divisions.
The full-year expenditure impact of this deferral is estimated at $-2.0 million.
For more information, contact Location H, page C8
n CHANGES PURSUANT TO THE TAX COLLECTION AGREEMENT
The following measures parallel income tax changes announced in the federal 2010 budget. The full-year revenue impact of these measures is estimated to be $3.3 million.
Personal Tax Measures
(2010/11 revenue impact: $2.5 million)
  Beginning in 2010, a single parent benefits from the option of having the Universal Child Care Benefit treated as income of the dependent child.
 
  Beginning in 2010, a deceased person’s Registered Retirement Savings Plan proceeds may be rolled over to the Registered Disability Savings Plan of a financially dependent infirm child or grandchild.
 
  Changes to the tax treatment of employee stock options are made to eliminate double deduction, limit deferrals and ensure that tax does not exceed the proceeds of disposition in cases where the value of the securities granted declines before they are taxed.
For more information, contact Location L, page C8

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C7
 
Business Tax Measures
(2010/11 revenue impact: $-0.2 million)
  Interest on overpaid income taxes, currently set at two percentage points above the government T-Bill rate, will no longer have the two percentage point premium.
For more information, contact Location L, page C8
n TECHNICAL AND ADMINISTRATIVE MEASURES
  To facilitate compliance with Provincial mandates and make Manitoba-made biodiesel more competitive with biodiesel produced in other jurisdictions, the following measures will be implemented:
    replacement of the 11.5¢ per litre motive fuel tax exemption with a production grant payable from a biodiesel fund financed from a portion of motive fuel tax revenue;
 
    provision of legislative authority to retroactively exempt certain parts of the province from the ethanol and biodiesel mandates and to exempt certain fuel suppliers from the mandates.
For more information contact Location K, page C8
  Transfers between a registered charity and its wholly controlled non-profit organization will be exempt from Land Transfer Tax on transfers of title registered after June 1, 2010.
For more information contact Location J, page C8
  The Book Publishing Tax Credit will be amended by removing the public policy provision as it pertains to the definition of an eligible book.
For more information contact Location I, page C8
  To reduce paperwork and tax administration costs for business, the following measures will be implemented:
    elimination of the requirement for small businesses, with under $10,000 in annual taxable sales, to register and collect retail sales tax;
 
    amalgamation of The Gasoline Tax Act and The Motive Fuel Tax Act into The Fuel Tax Act. For more information contact Location C, page C8
  To encourage the use of recycled products, a sales tax exemption will be implemented for shredded tires purchased by municipalities.
For more information contact Location C, page C8
  The Vehicle Valuation Program will be expanded to include private purchases of motorcycles, all-terrain vehicles and snowmobiles.
For more information contact Location C, page C8
  Enhanced enforcement measures are implemented under The Tax Administration and Miscellaneous Taxes Act.
For more information contact Location C, page C8
  The Riparian Tax Credit is extended for an intake group running from 2010 to 2014.
For more information contact Location B, page C8

 


Table of Contents

C8 / Taxation Adjustments BUDGET 2010
 
n CONTACTS FOR FURTHER INFORMATION
             
A
  Taxation, Economic and   Telephone:   204-945-3757
 
  Intergovernmental Fiscal Research   Fax:   204-945-5051
 
  Division, Manitoba Finance   e-mail:   fedprov@gov.mb.ca
 
           
B
  Manitoba Tax Assistance Office,   Telephone:   204-948-2115 in Winnipeg
 
  Manitoba Finance   Toll-free:   1-800-782-0771
 
      Fax:   204-948-2263
 
      e-mail:   tao@gov.mb.ca
 
           
C
  Taxation Division,   Telephone:   204-945-5603 in Winnipeg
 
  Manitoba Finance   Toll-free:   1-800-782-0318
 
      Fax:   204-945-0896
 
      e-mail:   mbtax@gov.mb.ca
 
           
D
  Manitoba Film and Music Recording   Telephone:   204-947-2040
 
  Development Corporation   Fax:   204-956-5261
 
      e-mail:   explore@mbfilmmusic.ca
 
           
E
  Financial Services, Business Services   Telephone:   204-945-5839
 
  Division, Manitoba Entrepreneurship,   Fax:   204-945-1193
 
  Training and Trade   Web:   www.gov.mb.ca/ctt/busdev/financial
 
           
F
  Apprenticeship Manitoba,   Telephone:   204-945-3337 in Winnipeg
 
  Manitoba Entrepreneurship,   Toll-free:   1-877-978-7233
 
  Training and Trade   Fax:   204-948-2346
 
      e-mail:   apprenticeship@gov.mb.ca
 
      Web:   www.gov.mb.ca/tce/apprent/future/apprent_taxcredit
 
           
G
  Knowledge Enterprises Branch,   Telephone:   204-945-0589
 
  Manitoba Innovation, Energy   Fax:   204-945-3977
 
  and Mines   e-mail:   newmediainquiries@gov.mb.ca
 
           
H
  Manitoba Agricultural Services   Telephone:   204-726-7068
 
  Corporation   Fax:   204-726-6849
 
      e-mail:   fstr@masc.mb.ca
 
      Web:   www.masc.mb.ca
 
           
I
  Arts Branch, Manitoba Culture,   Telephone:   204-945-3847
 
  Heritage and Tourism   Fax:   204-948-1684
 
      e-mail:   artsbranch@gov.mb.ca
 
           
J
  Manitoba Land Titles   Telephone:   204- 945-2042 (Winnipeg)
 
      Fax:   204- 948-2140 (Winnipeg)
        For other locations, see:
 
      Web:   www.gov.mb.ca/tpr/land_titles/surveys/docs/faq_lto.pdf
 
           
K
  Energy Development Initiative   Telephone:   204-945-7392
 
  Biofuels Office,   Toll-free:   1-866-444-4207
 
  Manitoba Innovation, Energy and Mines   Fax:   204-943-0031
 
      e-mail:   ethanol@gov.mb.ca
 
           
L
  Canada Revenue Agency   Toll-free:   1-800-959-8281 for individuals
 
          1-800-959-5525 for businesses

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C9
 
n PERSONAL TAX SAVINGS SINCE 1999
Personal Income Taxes,Education Property Tax Credits, Residential Education Support Levy and Farmland School Tax Rebate
                                                                                                         
                                                                                                    Cumulative  
                                                                                                    Annual  
    2000     2001     2002     2003     2004     2005     2006     2007     2008     2009     2010     2011     Totals  
                                            (Millions of Dollars)                                             (Millions of  
                                                                                                    Dollars)  
Income Tax Reductions                                                                                                
BUDGET
                                                                                                       
2000
    9       68       34                                                                               111  
2001
            29       7       18                                                                       54  
2002
                    15                                                                               15  
2003
                                    39                                                               39  
2005
                                                    30                                               30  
2006
                                                    8       34                                       42  
2007
                                                            25       51       28       16               120  
2008
                                                                    1       24       11               36  
2010
                                                                                    3       5       8  
SUBTOTAL
    9       97       56       18       39       0       38       59       52       52       30       5       455  
 
                                                                                                       
Property Tax Reductions1                                                                                        
BUDGET
                                                                                                       
2000
    26                                                                                               26  
2001
            27                                                                                       27  
2002
                    10                                                                               10  
2003
                            19                                                                       19  
2004
                                    23                                                               23  
2005
                                            37                                                       37  
2006
                                                    39                                               39  
2007
                                                            42       2       2                       46  
2008
                                                                    25                               25  
2009
                                                                            16                       16  
SUBTOTAL
    26       27       10       19       23       37       39       42       27       18                       268  
 
                                                                                                       
Annual Totals
    35       124       67       37       62       37       77       101       79       70       30       5       723  
Cumulative Annual Totals
    35       159       226       262       324       361       438       539       618       688       718       723          
Totals may not add due to rounding.
 
1   Property tax reductions result from increases to the Education Property Tax Credit; implementation of, and subsequent increases in the Farmland School Tax Rebate; and reductions in the Residential Education Support Levy, which was phased out completely in 2006.

 


Table of Contents

C10 / Taxation Adjustments BUDGET 2010
 
n MANITOBA INCOME TAX SAVINGS FOR TYPICAL TAXPAYERS
                     
                    Cumulative
    Tax payable   Tax Savings   2010 Savings   Savings
Income   1999   2010   in 2010   over 1999   over 11 Years
    (Dollars)       (Percentage)   (Dollars)
SINGLE PERSON1                
10,000   88   -73   161   182.1%   1,214
20,000   1,369   1,127   242   17.7%   2,020
40,000   4,012   3,347   665   16.6%   5,086
70,000   9,153   7,267   1,886   20.6%   13,437
100,000   14,572   12,487   2,085   14.3%   15,562
                     
 
FAMILY OF FOUR — ONE EARNER1            
25,000   411   -132   543   132.1%   4,262
40,000   2,861   1,851   1,010   35.3%   7,751
60,000   6,625   4,593   2,032   30.7%   15,461
75,000   9,435   7,023   2,412   25.6%   17,958
100,000   13,951   11,616   2,335   16.7%   17,248
                     
 
FAMILY OF FOUR — TWO EARNERS1            
30,000   533   133   399   74.9%   3,463
40,000   1,360   904   457   33.6%   4,187
60,000   4,107   3,261   846   20.6%   7,431
80,000   7,169   5,684   1,485   20.7%   12,045
100,000   10,188   8,205   1,984   19.5%   15,355
                     
 
SENIOR COUPLE2                
30,000   39   -316   355   910.4%   2,980
40,000   1,667   823   845   50.7%   5,526
60,000   5,635   3,450   2,185   38.8%   12,893
80,000   8,893   6,495   2,397   27.0%   15,485
 
1   It is assumed that taxfilers in the single and family examples have earned income and pay Canada Pension Plan and Employment Insurance premiums. In the two-earner family, it is assumed one taxfiler earns 60% of the income and the other earns 40% and pay child-care fees. The Children’s Fitness Tax Credit is also claimed for one child in both family examples. Where applicable, the tax payable has been reduced by the Personal Tax Credit.
 
2   For the senior couple example, it is assumed that both receive the Old Age Security Pension and only one spouse receives private pension income. The ability to split private pension income was offered beginning with 2007 therefore, for 2007 to 2010, it is assumed that private pension income is split 50/50.
 
    Note: Income does not reflect Universal Child Care Benefit entitlements but entitlements have been used to determine year-over-year savings.

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C 11
 
n MANITOBA INCOME TAX SINCE 1999
     
One-Earner Family of
  Two-Earner Family of
Four at $40,000
  Four at $60,000
 
   
(GRAPHICS LOGO)
  (GRAPHICS LOGO)
 
   
Source: Manitoba Finance
  Source: Manitoba Finance
 
   
 
  History of Middle Bracket
Single Individual at $70,000
  Rate Reductions
 
   
(GRAPHICS LOGO)
  (GRAPHICS LOGO)
 
   
Source: Manitoba Finance
  Source: Manitoba Finance

 


Table of Contents

C12 / Taxation Adjustments BUDGET 2010
 
n 2010 INTERPROVINCIAL COMPARISON OF TAX RATES
Shows rates applicable on December 31, 2010. Data as of March 23, 2010.
                                         
    BC     AB     SK     MB     ON  
Personal Income Tax
                                       
Top Marginal Rate (%)1
    14.70       10.00       15.00       17.40       17.41  
Health Care Premiums ($)2
    1,368                         0 to 900  
Employer Payroll Tax (%) 3
                      2.15       1.95  
Corporation Income Tax (%)
                                       
Small
    2.50       3.00       4.50       0.00       4.50  
Large
    10.50       10.00       12.00       12.00       12.00  
Manufacturing
    10.50       10.00       10.00       12.00       10.00  
Small business threshold ($000)
    500       500       500       400       500  
Capital Tax (%)4
                             
Banks
                3.25       3.00        
Sales Tax (%)5
    7.00             5.00       7.00       8.00  
Gasoline Tax (¢/l)6
    14.50       9.00       15.00       11.50       14.70  
Diesel Fuel Tax (¢/l)7
    15.00       9.00       15.00       11.50       14.30  
Tobacco Tax (¢/cigarette) 8
    18.50       20.00       18.30       20.50       12.35  
Corporation Income Tax Credits
                                       
Manufacturing (%)9
                5.00       10.00        
Research & Development (%)10
    10.00       10.00       15.00       20.00       10.00  
 
1   Top marginal provincial rates include surtaxes paid by taxpayers in the highest bracket.
 
2   The premium for BC is the family rate; lower rates apply for individuals. ON calculates premiums based upon taxable income: for incomes of $20,000 or less the premium is zero and the maximum premium of $900 is reached at an income of $200,600. The premiums for the QC Prescription Drug Plan are based on income and are a maximum of $585 for a single person and $1,170 for a family.
 
3   MB exempts firms with payrolls of less than $1.25 million. ON exempts firms with payrolls of less than $400,000. QC has graduated rates for firms with payrolls of under $5 million. NL exempts firms with payrolls of less than $1 million.
 
4   QC has a $1 million exemption and graduated rate reductions for the range between $1 million and $4 million. NS has a $5 million exemption.
 
5   Retail Sales Tax refers to general rate only. QC and PE apply the sales tax on top of QST- and GST-inclusive prices. Sales taxes in NB, NS and NL are harmonized with the federal Goods and Services Tax. ON and BC harmonize their sales taxes July 1, 2010.
n FEDERAL AND MANITOBA INCOME TAX RATES, 2010
Personal Income Tax Rates
                         
Federal           Manitoba    
Rate   Taxable Income Range   Rate   Taxable Income Range
15%
  $ 0 — $40,970       10.8 %   $ 0 — $31,000  
22%
  $ 40,971 — $81,941       12.75 %   $ 31,001 — $67,000  
26%
  $ 81,942 — $127,021       17.4 %            over $67,000
29%
           over $127,021                

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C13
 
                                         
QC     NB     NS     PE     NL  
                                       
Personal Income Tax
  19.22       14.30       19.25       18.37       15.50    
Top Marginal Rate (%) 1
  0 to 1,170                            
Health Care Premiums ($)2
  4.26                         2.00    
Employer Payroll Tax (%) 3
                                       
Corporation Income Tax (%)
  8.00       5.00       5.00       1.00       5.00    
Small
  11.90       11.00       16.00       16.00       14.00    
Large
  11.90       11.00       16.00       16.00       5.00    
Manufacturing
  500       500       400       500       500    
Small business threshold ($000)
  0.12             0.10                
Capital Tax (%)4
  0.48       3.00       4.00       5.00       4.00    
Banks
  7.50       8.00       8.00       10.00       8.00    
Sales Tax (%)5
  15.20       10.70       15.50       15.80       16.50    
Gasoline Tax (¢/l)6
  16.20       16.90       15.40       20.20       16.50    
Diesel Fuel Tax (¢/l)7
  10.30       11.75       21.52       22.45       18.00    
Tobacco Tax (¢/cigarette) 8
                                       
Corporation Income Tax Credits
  5.00                   10.00          
Manufacturing (%)9
        15.00       15.00             15.00    
Research & Development (%)10
 
6   Provincial gasoline taxes are fixed rates per litre. PE includes both a variable (maximum of 8.7¢/l) and a fixed (7.1¢/l) gasoline tax. Victoria and Montréal levy an additional 3.5¢/l and 1.5¢/l local tax, respectively, on gasoline. Greater Vancouver’s total tax, including a local levy, is 23.50¢. BC imposes a carbon tax of 3.33¢/l. QC imposes a carbon tax of 0.8¢/l on petroleum companies (it is assumed the tax is passed on to consumers). QC, NB, NS and NL levy provincial sales tax on the pump price. ON sales tax will apply after harmonization on July 1, 2010.
 
7   Provincial diesel fuel taxes are fixed rates per litre. PE includes both a variable (maximum of 8.7¢/l) and a fixed (11.5¢/l) diesel fuel tax. Victoria and Montréal levy an additional 3.5¢/l and 1.5¢/l local tax, respectively, on diesel fuel. Greater Vancouver’s total tax, including a local levy, is 24.00¢. BC imposes a carbon tax of 3.84¢/l. QC imposes a carbon tax of 0.8¢/l on petroleum companies (it is assumed the tax is passed on to consumers). QC, NB, NS and NL levy provincial sales tax on the pump price. ON sales tax will apply after harmonization on July 1, 2010.
 
8   SK, MB, NB, NS and NL apply sales tax to all tobacco products. ON and BC sales tax will apply to tobacco products after harmonization on July 1, 2010.
 
9   SK’s credit is fully refundable. 70% of MB’s credit is refundable. QC’s credit is fully refundable if under $250 million of taxable capital. PE’s credit is non-refundable. NS has a Manufacturing and Processing Investment Credit of 10% of eligible costs not delivered through the tax system.
 
10   BC’s credit is refundable for Canadian-controlled private corporations for expenditures up to $3 million. AB’s maximum credit is $400,000. AB, SK, ON, NB, NS, and NL’s credits are refundable. MB’s credit is fully refundable for specified qualified expenditures starting 2010 and partially refundable for in-house R&D starting 2011.
     Corporation Income Tax Rates
                 
    Federal     Manitoba  
     
Basic Rate
    18.0 %     12.0 %
Small Business Rate
    11.0 %     0.0 %*
Small Business Threshold
  $ 500,000     $ 400,000  
 
*   effective December 1, 2010

 


Table of Contents

C14 / Taxation Adjustments BUDGET 2010
 
n   Appendix 1:
 
    MANITOBA TAX EXPENDITURES 2009/10
Introduction
Governments use the tax system to pursue social, cultural and economic objectives in two ways: by direct spending of the revenue raised, and by providing targeted tax preferences to promote specific types of activity or behaviour. The targeted tax preferences can be thought of as tax expenditures since they have much the same effect as direct government spending. For example, direct grants for small businesses, and tax credits for people who invest in small businesses, could have quite similar costs and results. A tax expenditure is measured as a deviation from a benchmark tax base. The expenditure can be in the form of a deduction, credit, preferential rate, deferral or exemption. Tax expenditures may target taxpayers (ex: individuals, corporations); activities (ex: farming, film production, manufacturing); property (ex: machinery, equipment); sources of income (ex: pensions); transactions (ex: RRSP contributions); or events (ex: involuntary dispositions).
Accounting for Tax Expenditures
Tax expenditure accounts promote accountability and transparency in government programming. Direct expenditure programs are subject to review and approval by the Legislature, and are published annually in the public accounts. Tax expenditures, on the other hand, are not recorded as individual line items but are absorbed into revenue estimates. Tax expenditures reduce government revenues that would otherwise have been available for various direct expenditures. Therefore, tax expenditure accounts not only help to enhance the visibility of programs, but promote public accountability as well. It is generally understood that tax expenditure accounting in no way evaluates tax policy, nor does it address the desirability of the tax provisions, or their usefulness in achieving tax policy objectives.

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C15
 
Limitations of Tax Expenditure Accounting
Tax expenditure accounting has important limitations that must be kept in mind when interpreting results. There are no formal accounting guidelines for tax expenditures. The value of each tax expenditure is estimated individually. Interactions between provisions are not taken into account. This has two effects. First, estimates for two or more tax expenditures cannot be added together to arrive at a combined value. Second, changing any one tax expenditure might affect the value of other tax expenditures. For example, changing something that is a deduction from income, such as RRSP contributions, would change reported net income. This in turn would change the value of tax credits, such as Manitoba’s Personal Tax Credit, that depend on net income. The combined value of the tax expenditures listed in the account is substantially less than the sum of the individual items.
Reporting Tax Expenditures
Manitoba’s tax expenditure accounts are separated into six sections: personal income tax, corporation income tax, payroll tax, retail sales tax, fuel taxes and corporation capital tax. The estimates are calculated from tax collection and departmental data. The estimates provided are for the 2009/10 fiscal year. They do not include measures announced in the 2010 Budget or measures announced in previous budgets for implementation after 2009/10. Certain Manitoba personal income tax credits have the characteristics of tax expenditures but are, in fact, accounted for in Manitoba’s Estimates of Expenditure. Examples include the Education Property Tax Credit and the Personal Tax Credit. These credits are not included in the tax expenditure table. For the sake of comparison, these credits are listed below.
CREDITS ACCOUNTED FOR AS EXPENDITURE ITEMS
         
    2009/10  
    (millions of dollars)  
Education Property Tax Credit (including the Advance)
    264.9  
Personal Tax Credit
    42.0  
Farmland School Tax Rebate
    32.8  
School Tax Credit for Tenants and Homeowners (55+)
    1.8  
Political Contribution Tax Credit (for individuals only)
    1.0  
Community Enterprise Development Tax Credit
    0.2  
Riparian Tax Credit
    0.1  
TOTAL
    342.8  

 


Table of Contents

C16 / Taxation Adjustments BUDGET 2010
 
MANITOBA TAX EXPENDITURES, 2009/10
         
    (Millions of Dollars)  
PERSONAL INCOME TAX
       
(a) Adjustments to Income (in accordance with tax collection agreements)
       
Contributions to RRSPs
    144.0  
Capital gains inclusion rate
    63.8  
Contributions to RPPs
    75.5  
Lifetime capital gains exemption
    21.1  
Social assistance, WCB, and OAS/GIS (non-taxable income)
    18.2  
Union dues and professional fees
    16.5  
Child-care expenses
    11.7  
Pension income splitting
    12.5  
Northern Residents Deduction
    6.0  
Moving expenses
    2.3  
Scholarship and bursary income exemption
    1.0  
Tradespeople’s tool expense
    0.4  
Tax-Free Savings Account
    1.2  
 
       
(b) Non-refundable tax credits (basic credits provided federally and by all provinces)
       
Basic personal
    617.4  
CPP/EI
    104.7  
Family Tax Benefit
    59.7  
Charitable donations
    65.3  
Age
    34.1  
Tuition fees and education amount ($400/month)
    28.0  
Medical expenses
    30.4  
Spousal
    21.8  
Eligible dependant
    16.0  
Disability
    14.3  
Private pension
    9.3  
Caregiver
    1.4  
Student loan interest
    1.1  
Infirm dependants
    0.1  
 
       
(c) Other Manitoba Tax Measures
       
Tuition Fee Income Tax Rebate
    17.7  
Children’s Fitness Tax Credit
    3.0  
Foreign Tax Credit
    3.2  
Mineral Exploration Tax Credit
    1.1  
Primary Caregiver Tax Credit
    4.6  
Overseas Employment Tax Credit
    0.5  
Labour-sponsored Venture Capital Corporations Tax Credit
    1.3  
Adoption Expenses Tax Credit
    0.1  

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C17
 
         
    (Millions of Dollars)  
CORPORATION INCOME TAX
       
Low rate for small business
    131.5  
Manufacturing Investment Tax Credit
    23.2  
Film and Video Production Tax Credit
    16.0  
Research and Development Tax Credit
    15.8  
Small Business Venture Capital Tax Credit
    5.0  
Green Energy Equipment Tax Credit
    2.4  
Book Publishing Tax Credit
    0.6  
Co-op Education and Apprenticeship Tax Credits
    1.1  
Interactive Digital Media Tax Credit
    0.1  
Odour Control Tax Credit
    0.1  
 
       
PAYROLL TAX
       
$1.25 million exemption
    127.9  
Exemption for interjurisdictional common carriers
    12.9  
 
       
RETAIL SALES TAX
       
Exemptions and Refund Programs
       
Groceries
    160.1  
Farm machinery and repairs
    45.4  
Farm and organic fertilizer
    23.2  
Prescription drugs and medicine
    21.4  
Books, free magazines and newspapers, and school yearbooks
    17.6  
Farm pesticides and herbicides
    18.4  
Medical supplies, appliances and equipment
    14.1  
Electricity used for manufacturing or mining
    11.6  
Natural gas for residential heating
    12.6  
Water supplied by a municipality
    12.1  
Children’s clothing and footwear
    11.1  
Custom software and computer programming
    7.3  
Vehicle trade-ins
    5.6  
Toll-free calls
    5.8  
Electricity for residential heating
    6.7  
Vehicle private buy/sell refunds
    3.1  
Direct agents and qualifying items used in manufacturing a product for sale — including drill bits and explosives used in the mining industry
    3.0  
Municipal exemptions (including the purchase of ambulances, fire trucks and related equipment, and gravel or sand purchased by a municipality for its own use)
    1.6  
Qualifying geophysical survey and explorations equipment, drill rigs and well servicing equipment used in oil and gas exploration and development
    1.5  
Feminine hygiene products
    1.2  
Mobile, ready-to-move and modular homes (point of sale reduction)
    0.9  
Films for public broadcast
    0.4  

 


Table of Contents

C18 / Taxation Adjustments BUDGET 2010
 
         
    (Millions of Dollars)  
RETAIL SALES TAX (Continued)
       
Non-prescription smoking cessation products
    0.4  
Farm manure slurry tanks and lagoon liners
    0.1  
Qualifying geophysical survey and exploration equipment, and prototype mining equipment
    0.1  
 
       
FUEL TAX
       
Marked gasoline and diesel
    37.7  
Ethanol grant
    23.6  
International cargo flight refunds
    0.2  
Biodiesel exemption
    0.1  
 
       
CORPORATION CAPITAL TAX
       
Capital deduction
    24.4  
Manufacturers exemption
    26.9  
Credit unions and caisses populaires exemption
    14.7  
Co-operatives exemption
    0.7  
All estimates are based on the most complete information available at the time of publication.
In some cases, new information may significantly revise earlier estimates.
Source: Manitoba Finance, March 15, 2010

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C19
 

 


Table of Contents

C20 / Taxation Adjustments BUDGET 2010
 
n   Appendix 2:
 
    THE MANITOBA ADVANTAGE
Manitoba provides businesses and residents with a unique set of benefits that we call The Manitoba Advantage:
  a productive, well-educated and multilingual labour force
 
  a favourable business cost environment, including competitive office and land costs, reasonable construction costs and affordable taxes
 
  modern and extensive communications infrastructure
 
  an extensive network of R&D facilities, supporting innovation and productivity
 
  a convenient mid-continent location in the North American central time zone
 
  cost-effective transportation links and intermodal facilities providing shipping by road, rail, air and sea, enhanced by new, major infrastructure investments planned over the next several years, including CentrePort Canada, the country’s first foreign trade zone and inland port
 
  a favourable cost of living, including among the lowest electricity costs in North America
 
  reliable and accessible public services, including quality universal public health care and education
 
  a culture of caring, with a history of high levels of charitable giving and community volunteering
 
  a dynamic cultural and artistic community
 
  an attractive natural environment with plenty of opportunities for recreation and relaxation which further enhance Manitobans’ quality of life.
To show Manitoba’s cost competitiveness in more detail, two analyses are provided. The interprovincial comparison of annual personal costs and taxes (see p.C22), compares provinces’ living costs and tax levels for a variety of family types. Manitoba’s Competitive Environment for Manufacturing, provides a detailed comparison of the taxes and costs faced by representative manufacturers in various Canadian and U.S. cities (see p.C33).
Since 1999, Manitoba’s overall provincial rankings for personal costs and taxes have been among the best in Canada. Manitoba remains one of the most affordable provinces in which to live, among the best three in total combined living costs and taxes for six representative families.
Competitive operating costs and taxes have made Manitoba one of the least expensive provinces in Canada to do business. Among representative North American cities, both small and large manufacturers in Brandon and Winnipeg rank at or near the best on start-up costs, net income, overall taxes and return on investment.

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C21
 
Celebrating Manitoba
Manitoba’s vibrant arts and cultural assets range from opera to folk music, from Manitoba Theatre Centre, stage plays to the Fringe Festival, from the deep traditions of First Nations to the new-to-us traditions of Manitoba’s many ethno-cultural groups. The province’s renowned arts and cultural scene has much to offer in celebrating the spirit of Manitobans.
Just a few weeks ago, Canada’s Olympic Games in Vancouver celebrated Canadian achievements in sport and culture. Manitoba’s CentrePlace pavilion at the LiveCity Olympic site attracted over 100,000 visitors. The unique pavilion won a sustainability award and shared information about Manitoba and the Canadian Human Rights Museum.
Manitoba Homecoming 2010 hosted a Manitoba-style social the evening before Manitoba Day at the Olympics. Music by DJ Hunnicutt and Co-op, Doc Walker, Streetheart, Eagle & Hawk, Sierra Noble and Chic Gamine helped 900 people, including ex-Manitobans, athletes, tourists, friends and families celebrate Manitoba style. Over 30 Manitoba artists provided entertainment for the two-week Olympic events in Vancouver.
Manitoba Homecoming 2010 is a multi-partnership effort spearheaded by Destination Winnipeg, Travel Manitoba and the Manitoba Government. It’s a year-long experience to bring former and current Manitobans together to celebrate Manitoba’s many events, festivals and year-round fun. The World’s Largest Social is scheduled for May 15, 2010 and will celebrate Manitoba’s 140th birthday. So far, 60 communities around the province will be holding simultaneous socials for an estimated 30,000 people.

 


Table of Contents

C22 / Taxation Adjustments BUDGET 2010
 
2010 Comparison of
Personal Costs and Taxes
                                         
Single Person: $30,000   BC     AB     SK     MB     ON  
Provincial Income Tax
    869       1,134       1,428       1,514       773  
Health Premiums
    684       0       0       0       300  
 
                             
Subtotal PIT and Premiums
    1,553       1,134       1,428       1,514       1,073  
 
                             
 
                                       
Retail Sales Tax
    386       0       198       310       531  
Carbon Tax Credit
    (105 )     0       0       0       0  
 
                             
Total Provincial Taxes,Credits and Premiums
    1,834       1,134       1,626       1,824       1,605  
 
                             
 
                                       
Rent
    11,028       10,956       8,100       7,380       11,112  
Electricity
    309       668       553       324       554  
Public Transit
    832       921       758       792       1,364  
Telephone
    312       279       258       286       260  
 
                             
Total Living Costs
    12,480       12,823       9,670       8,782       13,290  
 
                             
Total Personal Costs and Taxes
    14,314       13,958       11,296       10,606       14,895  
 
                             
                                         
Single Parent One Child: $30,000   BC     AB     SK     MB     ON  
Provincial Income Tax
    (391 )     0       (442 )     95       (898 )
Health Premiums
    490       0       0       0       300  
 
                             
Subtotal PIT and Premiums
    99       0       (442 )     95       (598 )
 
                             
 
                                       
Family/Employment Tax Credits
    0       (694 )     0       0       0  
Child Benefits
    0       0       0       0       (210 )
Retail Sales Tax
    502       0       258       403       691  
Carbon Tax Credit
    (210 )     0       0       0       0  
 
                             
Total Provincial Taxes,Credits and Premiums
    391       (694 )     (184 )     497       (118 )
 
                             
 
                                       
Rent
    11,028       10,956       8,100       7,380       11,112  
Child Care
    5,521       3,600       3,696       3,335       996  
Electricity
    309       668       553       324       554  
Transit
    832       921       758       792       1,364  
Telephone
    312       279       258       286       260  
 
                             
Total Living Costs
    18,001       16,423       13,366       12,117       14,286  
 
                             
Total Personal Costs and Taxes
    18,392       15,729       13,181       12,615       14,169  
 
                             
Sums may not add due to rounding.

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C23
 
                                         
QC     NB     NS     PE     NL     Single Person: $30,000
  1,198       1,718       1,778       2,005       1,566    
Provincial Income Tax
  578       0       0       0       0    
Health Premiums
                             
 
  1,776       1,718       1,778       2,005       1,566    
Subtotal PIT and Premiums
                             
 
                                       
 
  428       507       534       343       588    
Retail Sales Tax
  0       0       0       0       0    
Carbon Tax Credit
                             
 
  2,204       2,225       2,312       2,348       2,154    
Total Provincial Taxes,Credits and Premiums
                             
 
                                       
 
  7,248       6,492       8,520       6,720       7,104    
Rent
  328       513       612       825       523    
Electricity
  658       705       766       649       775    
Public Transit
  260       266       303       296       266    
Telephone
                             
 
  8,494       7,976       10,201       8,491       8,668    
Total Living Costs
                             
 
  10,697       10,201       12,513       10,839       10,822    
Total Personal Costs and Taxes
                             
 
                                         
QC     NB     NS     PE     NL     Single Parent One Child: $30,000
  1,523       231       819       1,148       0    
Provincial Income Tax
  408       0       0       0       0    
Health Premiums
                             
 
  1,931       231       819       1,148       0    
Subtotal PIT and Premiums
                             
 
                                       
 
  (372 )     0       0       0       0    
Family/Employment Tax Credits
  (2,823 )     (323 )     0       0       0    
Child Benefits
  556       659       694       446       764    
Retail Sales Tax
  0       0       0       0       0    
Carbon Tax Credit
                             
 
  (708 )     567       1,513       1,594       764    
Total Provincial Taxes,Credits and Premiums
                             
 
                                       
 
  7,248       6,492       8,520       6,720       7,104    
Rent
  1,820       2,922       4,170       3,652       7,094    
Child Care
  328       513       612       825       523    
Electricity
  658       705       766       649       775    
Transit
  260       266       303       296       266    
Telephone
                             
 
  10,314       10,898       14,371       12,143       15,762    
Total Living Costs
                             
 
  9,606       11,465       15,884       13,736       16,527    
Total Personal Costs and Taxes
                             
 
Sums may not add due to rounding.

 


Table of Contents

C24 / Taxation Adjustments BUDGET 2010
 
2010 Comparison of
Personal Costs and Taxes
                                         
One-Earner Family of 4: $40,000   BC     AB     SK     MB     ON  
Provincial Income Tax
    810       625       (137 )     2,034       141  
Health Premiums
    1,368       0       0       0       450  
 
                             
Subtotal PIT and Premiums
    2,178       625       (137 )     2,034       591  
 
                             
 
                                       
Family/Employment Tax Credits
    0       (1,325 )     0       0       0  
Child Benefits
    (56 )     0       0       0       0  
Property Tax Credits
    (570 )     0       0       (650 )     (213 )
Retail Sales Tax
    949       0       542       871       1,381  
Gasoline Tax
    536       180       300       230       446  
Carbon Tax Credit
    (139 )     0       0       0       0  
 
                             
Total Provincial Taxes,Credits and Premiums
    2,898       (520 )     705       2,485       2,205  
 
                             
 
                                       
Mortgage Costs
    20,509       14,576       11,372       8,790       15,382  
Property Taxes
    3,698       2,011       2,947       2,629       3,296  
Home Heating
    1,404       920       1,208       1,361       1,198  
Electricity
    557       1,202       995       583       998  
Auto Insurance
    1,355       1,290       876       1,035       2,952  
Telephone
    312       279       258       286       260  
 
                             
Total Living Costs
    27,835       20,278       17,656       14,684       24,086  
 
                             
Total Personal Costs and Taxes
    30,733       19,758       18,361       17,169       26,291  
 
                             
                                         
One-Earner Family of 4: $60,000   BC     AB     SK     MB     ON  
Provincial Income Tax
    2,554       2,584       2,766       4,776       3,069  
Health Premiums
    1,368       0       0       0       600  
 
                             
Subtotal PIT and Premiums
    3,922       2,584       2,766       4,776       3,669  
 
                             
 
                                       
Family/Employment Tax Credits
    0       (1,325 )     0       0       0  
Child Benefits
    (439 )     0       0       0       0  
Property Tax Credits
    (570 )     0       0       (650 )     0  
Retail Sales Tax
    1,388       0       866       1,176       1,992  
Gasoline Tax
    536       180       300       230       446  
 
                             
Total Provincial Taxes,Credits and Premiums
    4,836       1,439       3,932       5,532       6,107  
 
                             
 
                                       
Mortgage Costs
    20,509       14,576       11,372       8,790       15,382  
Property Taxes
    3,698       2,011       2,947       2,629       3,296  
Home Heating
    1,404       920       1,208       1,361       1,198  
Electricity
    557       1,202       995       583       998  
Auto Insurance
    1,355       1,290       876       1,035       2,952  
Telephone
    312       279       258       286       260  
 
                             
Total Living Costs
    27,835       20,278       17,656       14,684       24,086  
 
                             
Total Personal Costs and Taxes
    32,671       21,717       21,588       20,216       30,194  
 
                             
Sums may not add due to rounding.

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C25
 
                                         
QC     NB     NS     PE     NL     One-Earner Family of 4: $40,000
  1,967       1,915       2,749       2,770       2,372    
Provincial Income Tax
  786       0       0       0       0    
Health Premiums
                             
 
  2,753       1,915       2,749       2,770       2,372    
Subtotal PIT and Premiums
                             
 
                                       
 
  (562 )     0       0       0       0    
Family/Employment Tax Credits
  (3,136 )     (250 )     0       0       0    
Child Benefits
  (350 )     0       0       0       0    
Property Tax Credits
  1,202       1,310       1,432       924       1,622    
Retail Sales Tax
  498       360       464       316       486    
Gasoline Tax
  0       0       0       0       0    
Carbon Tax Credit
                             
 
  405       3,335       4,645       4,010       4,480    
Total Provincial Taxes,Credits and Premiums
                             
 
                                       
 
  9,192       8,350       7,837       5,860       7,636    
Mortgage Costs
  3,182       2,402       2,335       2,368       1,681    
Property Taxes
  1,780       1,416       1,117       1,995       1,814    
Home Heating
  591       923       1,013       1,485       941    
Electricity
  825       859       1,091       840       1,416    
Auto Insurance
  260       266       303       296       266    
Telephone
                             
 
  15,830       14,216       13,696       12,844       13,754    
Total Living Costs
                             
 
  16,236       17,552       18,341       16,854       18,234    
Total Personal Costs and Taxes
                             
 
                                         
QC     NB     NS     PE     NL     One-Earner Family of 4: $60,000
  5,378       4,708       5,717       5,490       4,900    
Provincial Income Tax
  1,155       0       0       0       0    
Health Premiums
                             
 
  6,533       4,708       5,717       5,490       4,900    
Subtotal PIT and Premiums
                             
 
                                       
 
  0       0       0       0       0    
Family/Employment Tax Credits
  (2,473 )     (250 )     0       0       0    
Child Benefits
  0       0       0       0       0    
Property Tax Credits
  1,640       1,895       1,797       1,291       2,082    
Retail Sales Tax
  498       360       464       316       486    
Gasoline Tax
                             
 
  6,198       6,713       7,978       7,097       7,468    
Total Provincial Taxes,Credits and Premiums
                             
 
                                       
 
  9,192       8,350       7,837       5,860       7,636    
Mortgage Costs
  3,182       2,402       2,335       2,368       1,681    
Property Taxes
  1,780       1,416       1,317       1,995       1,914    
Home Heating
  591       923       1,013       1,485       941    
Electricity
  825       859       1,091       840       1,416    
Auto Insurance
  260       266       303       296       266    
Telephone
  15,830       14,216       13,896       12,844       13,854    
Total Living Costs
                             
 
  22,028       20,930       21,874       19,941       21,322    
Total Personal Costs and Taxes
                             
 
Sums may not add due to rounding.

 


Table of Contents

C26 / Taxation Adjustments BUDGET 2010
 
2010 Comparison of Personal Costs and Taxes
                                         
Two-Earner Family of 4: $60,000   BC     AB     SK     MB     ON  
Provincial Income Tax
    1,156       1,332       937       3,100       773  
Health Premiums
    1,368       0       0       0       300  
 
                             
Subtotal PIT and Premiums
    2,524       1,332       937       3,100       1,073  
 
                             
 
                                       
Family/Employment Tax Credits
    0       (1,325 )     0       0       0  
Child Benefits
    (252 )     0       0       0       0  
Property Tax Credits
    (570 )     0       0       (650 )     (93 )
Retail Sales Tax
    1,388       0       866       1,176       1,992  
Gasoline Tax
    804       270       450       345       669  
Carbon Tax Credit
    (19 )     0       0       0       0  
 
                             
Total Provincial Taxes,Credits and Premiums
    3,875       277       2,253       3,971       3,641  
 
                             
 
                                       
Mortgage Costs
    20,509       14,576       11,372       8,790       15,382  
Property Taxes
    3,698       2,011       2,947       2,629       3,296  
Child Care
    16,442       13,200       11,952       9,776       8,000  
Home Heating
    1,404       920       1,208       1,361       1,198  
Electricity
    557       1,202       995       583       998  
Auto Insurance
    2,624       2,479       1,692       1,984       5,767  
Telephone
    312       279       258       286       260  
 
                             
Total Living Costs
    45,546       34,667       30,424       25,409       34,901  
 
                             
Total Personal Costs and Taxes
    49,420       34,944       32,678       29,380       38,543  
 
                             
                                         
Two-Earner Family of 5: $75,000   BC     AB     SK     MB     ON  
Provincial Income Tax
    1,820       2,214       1,689       4,226       1,724  
Health Premiums
    1,368       0       0       0       516  
 
                             
Subtotal PIT and Premiums
    3,188       2,214       1,689       4,226       2,240  
 
                             
 
                                       
Family/Employment Tax Credits
    0       (1,704 )     0       0       0  
Child Benefits
    (688 )     0       0       0       0  
Property Tax Credits
    (570 )     0       0       (650 )     0  
Retail Sales Tax
    1,752       0       1,009       1,572       2,396  
Gasoline Tax
    804       270       450       345       669  
 
                             
Total Provincial Taxes,Credits and Premiums
    4,486       780       3,148       5,493       5,305  
 
                             
 
                                       
Mortgage Costs
    25,014       17,281       11,793       11,561       22,066  
Property Taxes
    4,473       2,573       4,163       3,477       4,702  
Child Care
    24,663       20,952       17,928       14,485       12,500  
Home Heating
    2,340       1,533       2,013       2,268       1,997  
Electricity
    928       2,003       1,658       972       1,663  
Auto Insurance
    2,624       2,479       1,692       1,984       5,767  
Telephone
    312       279       258       286       260  
 
                             
Total Living Costs
    60,354       47,100       39,505       35,033       48,955  
 
                             
Total Personal Costs and Taxes
    64,839       47,880       42,654       40,526       54,260  
 
                             
Sums may not add due to rounding.

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C27
 
                                         
QC     NB     NS     PE     NL     Two-Earner Family of 4: $60,000
  4,762       2,519       2,669       3,045       2,568    
Provincial Income Tax
  1,155       0       0       0       0    
Health Premiums
                             
 
  5,917       2,519       2,669       3,045       2,568    
Subtotal PIT and Premiums
                             
 
                                       
 
  0       0       0       0       0    
Family/Employment Tax Credits
  (2,473 )     (250 )     0       0       0    
Child Benefits
  0       0       0       0       0    
Property Tax Credits
  1,640       1,895       1,797       1,291       2,082    
Retail Sales Tax
  747       540       696       474       729    
Gasoline Tax
  0       0       0       0       0    
Carbon Tax Credit
                             
 
  5,830       4,704       5,162       4,810       5,379    
Total Provincial Taxes,Credits and Premiums
                             
 
                                       
 
  9,192       8,350       7,837       5,860       7,636    
Mortgage Costs
  3,182       2,402       2,335       2,368       1,681    
Property Taxes
  3,640       12,844       14,750       11,492       16,708    
Child Care
  1,780       1,416       1,317       1,995       1,914    
Home Heating
  591       923       1,013       1,485       941    
Electricity
  1,546       1,667       2,124       1,605       2,780    
Auto Insurance
  260       266       303       296       266    
Telephone
                             
 
  20,191       27,868       29,679       25,101       31,926    
Total Living Costs
                             
 
  26,021       32,572       34,841       29,911       37,305    
Total Personal Costs and Taxes
                             
 
                                         
QC     NB     NS     PE     NL     Two-Earner Family of 5: $75,000
  7,244       3,729       3,935       4,544       3,989    
Provincial Income Tax
  1,155       0       0       0       0    
Health Premiums
                             
 
  8,399       3,729       3,935       4,544       3,989    
Subtotal PIT and Premiums
                             
 
                                       
 
  0       0       0       0       0    
Family/Employment Tax Credits
  (2,918 )     (146 )     0       0       0    
Child Benefits
  0       0       0       0       0    
Property Tax Credits
  2,086       2,632       2,556       1,580       2,589    
Retail Sales Tax
  747       540       696       474       729    
Gasoline Tax
                             
 
  8,313       6,755       7,187       6,598       7,307    
Total Provincial Taxes,Credits and Premiums
                             
 
                                       
 
  14,906       13,873       11,353       9,083       12,177    
Mortgage Costs
  5,342       4,502       3,382       3,670       2,706    
Property Taxes
  5,460       19,266       22,548       13,896       25,062    
Child Care
  2,967       2,360       2,195       3,325       3,190    
Home Heating
  985       1,538       1,688       2,475       1,568    
Electricity
  1,546       1,667       2,124       1,605       2,780    
Auto Insurance
  260       266       303       296       266    
Telephone
                             
 
  31,466       43,472       43,593       34,350       47,749    
Total Living Costs
                             
 
  39,779       50,228       50,780       40,948       55,056    
Total Personal Costs and Taxes
                             
 
Sums may not add due to rounding.

 


Table of Contents

C28 / Taxation Adjustments BUDGET 2010
 
2010 Comparison of Personal Costs and Taxes Net of Graduate Credits and Tuition Rebates
                                         
Single Person: $50,000   BC     AB     SK     MB     ON  
Provincial Income Tax
    2,199       3,026       3,904       4,578       2,455  
Graduate Tuition/Credit Rebates
    0       0       (2,000 )     (2,500 )     0  
Health Premiums
    684       0       0       0       600  
 
                             
Subtotal PIT,Credit and Premiums
    2,883       3,026       1,904       2,078       3,055  
 
                             
 
                                       
Property Tax Credits
    (570 )     0       0       (650 )     0  
Retail Sales Tax
    584       0       352       512       843  
Gasoline Tax
    536       180       300       230       446  
 
                             
Total Provincial Taxes,Credits and Premiums
    3,434       3,206       2,556       2,169       4,344  
 
                             
 
                                       
Mortgage Costs
    20,509       14,576       11,372       8,790       15,382  
Property Taxes
    3,698       2,011       2,947       2,629       3,296  
Home Heating
    1,404       920       1,208       1,361       1,198  
Electricity
    557       1,202       995       583       998  
Auto Insurance
    1,355       1,290       876       1,035       2,952  
Telephone
    312       279       258       286       260  
 
                             
Total Living Costs
    27,835       20,278       17,656       14,684       24,086  
 
                             
 
                                       
Total Personal Costs and Taxes
    31,268       23,484       20,213       16,854       28,431  
 
                             
Sums may not add due to rounding.
     
Income Tax and Health Premiums,
   
Net of Graduate Credits and
  Personal Costs and Taxes -
Tuition Rebates
  Graduate Earning $50,000
 
(GRAPHIC)
  (GRAPHIC)
Source: Manitoba Finance
  Source: Manitoba Finance

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C29
 
                                         
QC     NB     NS     PE     NL     Single Person: $50,000
  5,157       3,998       4,673       4,580       3,978    
Provincial Income Tax
  0       (3,998 )     (2,500 )     0       0    
Graduate Tuition/Credit Rebates
  578       0       0       0       0    
Health Premiums
                             
 
  5,734       0       2,173       4,580       3,978    
Subtotal PIT, Credit and Premiums
                             
 
                                       
 
  (50 )     0       0       0       0    
Property Tax Credits
  711       801       807       554       926    
Retail Sales Tax
  498       360       464       316       486    
Gasoline Tax
                             
 
  6,893       1,161       3,444       5,450       5,390    
Total Provincial Taxes, Credits and Premiums
                             
 
                                       
 
  9,192       8,350       7,837       5,860       7,636    
Mortgage Costs
  3,182       2,402       2,335       2,368       1,681    
Property Taxes
  1,780       1,416       1,117       1,995       1,814    
Home Heating
  591       923       1,013       1,485       941    
Electricity
  825       859       1,091       840       1,416    
Auto Insurance
  260       266       303       296       266    
Telephone
                             
 
  15,830       14,216       13,696       12,844       13,754    
Total Living Costs
                             
 
  22,724       15,378       17,140       18,294       19,143    
Total Personal Costs and Taxes
                             
 
Sums may not add due to rounding.

 


Table of Contents

C30 / Taxation Adjustments BUDGET 2010
 
2010 Comparison of Personal Costs and Taxes
     
Single Person Earning $30,000
  Single Parent Earning $30,000
 
(GRAPHIC)
  (GRAPHIC)
     
Single-Earner Family of Four
  Single-Earner Family of Four
Earning $40,000
  Earning $60,000
 
(GRAPHIC)
  (GRAPHIC)
     
Two-Earner Family of Four
  Two-Earner Family of Five
Earning $60,000
  Earning $75,000
 
(GRAPHIC)
  (GRAPHIC)

 


Table of Contents

BUDGET 2010 Taxation Adjustments / C31
 
n NOTES
Provincial taxes,1 credits and premiums are based on information available prior to March 23, 2010, for the following major urban centres in each province: Vancouver, Calgary, Saskatoon, Winnipeg, Toronto, Montréal, Saint John, Halifax, Charlottetown and St. John’s.
Auto Insurance coverage includes $2 million Third Party Liability, a $500 All Perils Deductible, accident benefits and $2 million Standard Policy Form #44 family protection coverage for those jurisdictions without no-fault injury coverage, and La Societé de l’Assurance Automobile du Québec injury protection in Montréal. The driver is married, age 35, has been accident- and conviction-free for 15 or more years; and the auto is driven to work and school on a limited commuting basis. Rates were provided by the Insurance Corporation of British Columbia for British Columbia, SGI Canada for Saskatchewan, and Manitoba Public Insurance for Manitoba. Rates for other cities are the average of the quotes from 10 private insurers providing coverage in those provinces. Discounts for second or multiple vehicles, where available, are not included in the auto insurance calculations. Rebates issued by MPI or other insurers are also excluded. Auto insurance for the 2000 Dodge Caravan and the 2003 Chevrolet Malibu are used in these examples, two of the more common vehicles driven in Manitoba. The single-earner families of four at $40,000 and $60,000 insure the Malibu, while the two-earner family of four at $60,000 and the two-earner family of five at $75,000 insure both the Malibu and the Caravan.
Child Care costs are based on annual parent fees, less subsidies paid, for preschool aged children, typically over two years of age and under six years of age, for 260 days or 12 months per year. Manitoba and Quebec are the only provinces with regulated maximum parent fees. Fees for other provinces are those obtained online and/or in a survey conducted in the first quarter of 2010.
Electricity charges are based on annual consumption of 8,100 kWh for a detached bungalow for families with $40,000 and $60,000 of income. Annual consumption of 4,500 kWh is used for the single person and single parent renters and 13,500 kWh for the family at $75,000. Rates do not include municipal taxes or charges.
Gasoline Tax is based on annual consumption of 2,000 litres for the single-vehicle families and 3,000 litres for the two-vehicle families. The gasoline tax includes all provincial levies on gas, including carbon tax and sales tax where applicable. Sales tax is based on pump prices as of December 15, 2009.
Health Premiums are annual premiums for hospital insurance and medical services in provinces which levy them. Quebec’s Prescription Drug Plan fee is included.
Home Heating charges are based on an annual consumption level of 3,200 cubic metres for a detached bungalow for families with $40,000 and $60,000 of income. Annual consumption for the detached bungalow has been proportionally adjusted for a family with $75,000 of income to reflect the consumption for an executive detached two storey. For the Atlantic provinces, the figures represent the BTU equivalent consumption of fuel oil. Refundable home-heating benefits have been deducted from home-heating costs where applicable.
Mortgage Costs are based on the average home prices for a detached bungalow for families with $40,000 and $60,000 of income, and for the graduate with $50,000 of income, and on an executive detached two storey for a family with $75,000 of income, from the Royal LePage Fourth Quarter 2009 Survey of Canadian House Prices, with one-half of the home price being financed over 25 years at a five-year closed mortgage rate of 5.5%.
 
1   Tables reflect 2010 budget changes for Alberta, British Columbia, New Brunswick and Canada.

 


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C32 / Taxation Adjustments BUDGET 2010
 
Net Child Benefits represent provincial programs comparable to the Canada Child Tax Benefit for families with children. Provincial child benefit measures are available in British Columbia (BC Family Bonus and the BC Earned Income Benefit), Alberta (Alberta Family Employment Tax Credit), Manitoba (Manitoba Child Benefit), Ontario (Ontario Child Care Supplement for Working Families and the Ontario Child Benefit), Quebec (Child Assistance Payments), New Brunswick (New Brunswick Child Tax Benefit and the New Brunswick Working Income Supplement), Nova Scotia (Nova Scotia Child Benefit), and Newfoundland and Labrador (Newfoundland and Labrador Child Benefit).
Property Taxes are based on the assessed values for a detached bungalow for families with $40,000 and $60,000 of income, as per the 2007 Residential Property Taxes and Utility Charges Survey (City of Edmonton) updated for 2009 by the property tax component of each province’s Consumer Price Index. Property taxes for the detached bungalow have been proportionally adjusted for a family with $75,000 of income to reflect the taxes paid for an executive detached two storey.
Provincial Income Tax is calculated for a single renter with $30,000 earned income, a single parent with one preschool child who rents and has $30,000 in earned income, and three family profiles with $40,000, $60,000 and $75,000 of earned income, respectively. These incomes are before receipt of the Universal Child Care Benefit (UCCB) but the UCCB is used in the calculation of income tax. For the single parent, UCCB is treated as taxable income of the dependent child. Families include one income earner, a spouse and two preschool dependent children; two income earners and two preschool children; or two income earners and three preschool children. For two-earner families, one spouse is assumed to earn 60% of the family income while the other spouse earns 40%. Personal non-refundable credits include the CPP/QPP and EI contribution credits. For the single parent, child-care costs less subsidies for each province have been deducted from income. For two-earner families, eligible child-care costs have been deducted from the income of the spouse with the lower income. Gross Quebec personal income tax has been reduced by the 16.5% abatement from federal income tax. Refundable sales tax credits and provincial tax reductions and rebates have been deducted from income tax payable. Property tax credits for renters are included in income tax, but property tax credits for homeowners are shown separately.
Rent is from Canada Mortgage and Housing Corporation’s Rental Market Survey, October 2009, and is based on the average one-bedroom apartment rent for each urban centre.
Retail Sales Tax is based upon an average expenditure basket at the selected gross income levels from the 2007 Survey of Household Spending (Statistics Canada), inflated to 2009 values using each province’s Consumer Price Index. Amounts for British Columbia and Ontario are based on the new HST regime.
Transit Fares are based on adult monthly pass rates in effect in February 2010. The full impact of the federal non-refundable public transit tax credit has reduced the cost of transit fees shown for the single individual and single parent with one child examples.
Telephone charges are the basic service rates for individual residences.

 


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BUDGET 2010 Taxation Adjustments /C33
 
n   Appendix 3:
 
    MANITOBA’S COMPETITIVE ENVIRONMENT FOR MANUFACTURING
Manitoba’s manufacturing sector is highly diversified, producing a broad range of industrial and consumer goods. Major manufactured goods include urban and intercity buses, aerospace equipment, primary metals, fabricated metals, industrial chemicals, machinery, pharmaceuticals, processed meats, processed vegetables and grain products, furniture, plastic products and manufactured windows. Manitoba is North America’s largest manufacturer of buses and Canada’s third-largest centre for the manufacture of aerospace equipment. Biovail, located in Steinbach, is one of the largest Canadian-owned pharmaceutical companies in the world. Maple Leaf Foods operates one of the world’s largest and most technologically advanced meat processing plants in Brandon, Manitoba’s second-largest city.
Payroll-related levies
U.S. employers pay federal and state unemployment taxes, social security tax and medicare tax and are also required to provide workers’ compensation coverage. Canadian employers do not pay provincial unemployment or federal medicare taxes, though some provinces have payroll taxes. For example, at the same wage level, a firm in Atlanta will have higher payroll-related taxes and levies than in Winnipeg.
Payroll-Related Taxes and Levies per Employee Larger Manufacturing Firm Winnipeg and Atlanta
     (GRAPHIC)
Manitoba’s competitive business environment continues to attract manufacturing investment due to:
  our central location and excellent transportation links to the rest of North America
 
  low industrial and commercial land costs
 
  electricity costs which are among the lowest in the world
 
  a skilled and well-educated work force
 
  one of the best R&D tax credit regimes.
Manitoba Finance’s competitiveness model compares the tax structure and cost environment for representative smaller and larger manufacturing firms relative to several other North American cities.
The model simulates start-up, operating, financial and taxation costs over a period of 20 years. It incorporates future unconditional changes in taxes that have been announced by the federal and provincial or state governments. The representative firms’ profiles have been updated using the most recent data available from Statistics Canada, local economic development boards and other public sources.
Interjurisdictional Competitiveness
The following indicators are used to assess cost and tax competitiveness for both a smaller and a larger manufacturing firm:
  net cost of investment, or start-up costs (including applicable taxes)
 
  pre-tax net income
 
  effective tax rates
 
  internal rates of return.

 


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C34 / Taxation Adjustments BUDGET 2010
 
The model uses actual costs for each city and calculates net revenue and cash flow, including start-up costs, based on the operating costs in each location2. The results for each city are compared to the overall average of all cities for each of the indicators and presented in the charts that follow.
Net Cost of Investment
The costs of starting a manufacturing plant (land, buildings, and machinery and equipment) in Manitoba are among the lowest of all cities. Investment tax credits on capital asset purchases reduce the net cost of investment. Start-up costs in larger cities tend to be higher due to the cost of land and construction labour.
     
Net Cost of Investment
  Net Cost of Investment
Smaller Manufacturing Firm
  Larger Manufacturing Firm
(GRAPHIC)
  (GRAPHIC)
 
   
Pre-Tax Net Income
Pre-tax net income compares Manitoba’s cost competitiveness to other jurisdictions. It is calculated by deducting production material costs and location-specific operating costs from fixed annual sales figures. Annual sales are uniform for all locations and are ramped up through the first four years then fixed across the cities at $4 million for the smaller firm and $45 million for the larger firm for years five to twenty. Annual production material costs are equal to 46% of sales in a given year.
The following location-specific costs are also deducted from annual sales:
  average manufacturing wages
 
  local utility costs for electricity and basic business telephone lines
 
  interest charges on debt used to finance construction of the manufacturing plants
 
  For comparison purposes U.S. data is converted to Canadian dollars at an exchange rate of C$1.06 (average rate November 2009).

 


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BUDGET 2010 Taxation Adjustments / C35
 
A talented, well-educated and productive labour force, low utility costs and lower than average start-up costs contribute to the cost advantages of operating a manufacturing plant in Manitoba.
     
Pre-Tax Net Income
  Pre-Tax Net Income
Smaller Manufacturing Firm
  Larger Manufacturing Firm
 
(GRAPHIC)
  (GRAPHIC)
 
   
  depreciation of capital assets: building costs (which vary by city based on local construction wages) and machinery and equipment (which are assumed to be the same across all cities)
Brandon yields the highest pre-tax net income for both the smaller and larger manufacturing firms, while Winnipeg has the third-highest pre-tax net income for both model firms.
Effective Tax Rates
Effective tax rates are generated by computing gross taxes as a proportion of pre-tax net income over the 20-year period. The following annual operating taxes are taken into account:
  corporation income taxes
 
  local property and business taxes
 
  corporation capital and U.S. franchise taxes
 
  payroll taxes
 
  workers’ compensation premiums
 
  statutory pension and unemployment insurance premiums.
For U.S. firms, employer-paid health insurance premiums are also included.
The following tax expenditures that benefit the manufacturing sector are also taken into account:
  investment tax credits

 


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C36 / Taxation Adjustments BUDGET 2010
     
Effective Tax Rates
  Effective Tax Rates
Smaller Manufacturing Firm
  Larger Manufacturing Firm
 
(GRAPHIC)
  (GRAPHIC)
 
   
  tax holidays
 
  accelerated capital cost allowances
 
  preferential tax rates.
Not included are enterprise zones, grants, and other forms of governmental and third-party financial assistance programs that are subject to an approval process.
     
Internal Rates of Return
  Internal Rates of Return
Smaller Manufacturing Firm
  Larger Manufacturing Firm
 
(GRAPHIC)
  (GRAPHIC)
 
   

 


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BUDGET 2010 Taxation Adjustments / C37
 
For both the smaller and larger manufacturing firms, both Winnipeg’s and Brandon’s effective tax rates are well below the average. For smaller firms, only Moncton has a lower rate.
Overall Competitiveness
Overall competitiveness is compared by calculating internal rates of return which are commonly used by businesses in their investment and location decisions. Internal rates of return for each city are calculated using start-up costs and cash flow over a 20-year period, specific to a smaller and a larger manufacturing firm and discounted using commercial interest rates. The following charts illustrate the combined effect of taxes and costs on the internal rates of return for the representative smaller and larger manufacturing corporations in the selected jurisdictions.
The internal rates of return for both Winnipeg and Brandon are above the overall average of the cities included in the study. Brandon has the highest internal rate of return and Winnipeg has the third-highest internal rate of return for both the smaller and larger manufacturing firms.
n   CONCLUSION
Manitoba continues to maintain a highly competitive overall business cost and tax environment for both smaller and larger firms engaged in manufacturing and processing.