After some procedural wrangling, Manitoba’s provincial budget was finally released eight days after what was originally scheduled. However, due to COVID-19 the fiscal situation facing the province has changed drastically over the past week. An emergency COVID-19 supplement was tabled with the budget and to reflect the urgency of the pandemic the legislature rose shortly after the budget was delivered. At this time no date has been given for the legislature to resume sitting. Originally, the deficit for the 2020-21 fiscal year was forecast to be $220 million – a $140 million improvement over the 2019 budget. A deficit of $50 million was projected for 2021-22 with the province balancing it’s books the year after. As the impacts are still largely unknown the province gave a range of scenarios for how COVID-19 could impact the province’s finances this fiscal year. On the low end they are anticipating a negative impact of $160 million, which is due to a combination of lower revenues and higher health expenditures. The high impact scenario is $682 million, which assumes a nominal GDP slow down of -2.4% and health expenditures rising by $200 million to combat COVID-19. The province notes these are preliminary estimates that are highly variable and there will be updates as the situation unfolds over the upcoming months
Overall, Manitoba is in a good position for this increased uncertainty as the fiscal stabilization account is forecast to have a balance of $872 million by March 31, 2021. The federal government has also made financial supports available giving the province close to $1 billion in financial flexibility to counteract the negative impacts of COVID-19. Other major news included the province bringing back a carbon tax. The $25 a tonne tax is scheduled to come into effect on July 1, 2020. It will apply to gas, liquid and solid fuel products. To offset the revenue increase the province will be cutting the provincial sales tax by one point to 6% on July 1, 2020. With the federal carbon tax rising to $30 a tonne on April 1, 2020 the new Manitoba tax is expected to replace a portion of the federal tax and not be on top of any federal taxation measures. Other initiatives in the budget include:
An increase in payroll tax thresholds which will now exempt businesses on their first $1.5 million in payroll. This is up from the previous $1.25 million threshold and will help 1,000 Manitoba employers. This change will come into effect on January 1, 2021.
The establishment of a new Energy Policy Office. This office will focus on providing strategic advice in areas such as renewables, efficiency, electrification and regulation. The work of this office is expected to dovetail with Manitoba Hydro’s new strategic plan and Efficiency Manitoba programming.
If you have any questions please contact our Manitoba Associate, Michael Juce at 204-764-0317 or email@example.com.