Will you be better off when Manitoba overhauls its education property tax system next year?
New credit of as much as $1,500 will help many homeowners, but tens of thousands won't get as much help
Wab Kinew insists the NDP's upcoming overhaul of the education property tax system is a better approach than the one taken by the previous Manitoba government.
"I invite anyone to look ahead to the $1,500 homeowner tax credit we're bringing in and compare it to the cheques that the previous government mailed out," the premier confidently told reporters last month.
But if you're a property owner, are you really better off with the upcoming NDP property tax credit of up to $1,500, or with the existing package of education-tax rebates and credits the PCs offered?
It's not as easy an answer as Kinew has suggested.
And frankly, it's a confusing subject for anyone who isn't proficient at number-crunching. There are various factors at play, ranging from the assessed value of your home to the tax rate your local school division charges.
That's one of the reasons people like Leo Deurbrouck, who offers tax services by house call, have a steady income.
"I would say that nobody understands it, for the most part," he said of the refund system — whether it's the PC or NDP version.
"It's very confusing because the government … gives you a credit back and [people] ask, 'Well, why do we have to pay it in the first place?'"
'Most people … don't even know what it's for'
Property owners have long received an education property tax credit, but in 2021, they started getting a rebate, too.
The rebate arrived in the mail as a cheque. It wasn't as efficient as the province simply deducting the amount off your school taxes, said Deurbrouck, who runs Leo's Mobile Tax Service in Steinbach.
"Most people just received the cheque and don't even know what it's for, and put it in their bank account and they're happy."
WATCH | What will the tax changes mean for homeowners?
The Tories gradually increased the size of the rebate cheque, landing at 50 per cent of the tax by 2023.
The party said it planned to gradually increase the rebate amount until the tax was phased out entirely.
But then last fall's election swept a new party into office.
The NDP, now in government, is sticking with the 50 per cent provincial property tax rebate and $350 education tax credit for 2024, but this time, owners are getting a break at the source instead of a cheque in the mail.
That all changes next year, when the existing rebate and tax credit will be scrapped in favour of a new credit of up to $1,500 off those taxes.
If that $1,500 credit exceeds your gross school taxes, you'll stop paying school taxes entirely.
The NDP has tried to keep its messaging on the policy change simple: the majority of homeowners will pay less.
Deurbrouck agreed that most people will be better off.
However, the government still expects to pocket an additional $148 million through the tax change.
How, you may ask?
Tens of thousands of property owners will pay more.
A quick way to find out if that's you: if your gross school tax, before any rebates or credits, is higher than $2,301, you'll pay more. Generally speaking, homes with an assessed value at $437,000 or higher fall into that category.
However, the government's estimate comes with an asterisk: The figure is based on last year's tax rates.
School taxes have since increased throughout the province, and may again in 2025.
The government estimated 17 per cent of homeowners will pay more, but because of the increases in school taxes, that percentage increases.
In some areas of Winnipeg, homes with an assessed value just above $400,000 will pay more.
Middle class will hurt: PCs
The Progressive Conservatives, now the Official Opposition, say the change won't just hurt the ultra-wealthy financially, but middle-class families as well.
Obby Khan, the party's finance critic, has called the NDP's plan a tax grab.
"I do appreciate that these houses are … very expensive for some Manitobans, but that's also a lot of middle-class Manitobans," Khan told reporters in April.
Other property owners will pay more as well.
The new credit only applies to a person's main residence, meaning cottage owners won't get a break on their seasonal home.
Those who'll likely lose the most financially from the NDP's scheme are the owners of commercial or rental properties. They aren't scheduled to get any rebates or credits.
"All those people are going to pay way more property taxes than they do now, because everybody was getting a percentage back," Deurbrouck said.
The rebate for commercial properties was limited to 10 per cent under the PCs, rather than 50 per cent for residential homeowners.
The NDP government has pledged to help small businesses with their property taxes but hasn't announced the details, or specified what it considers "small businesses."
Farmers who own property won't see any change under the NDP's plan, as their 50 per cent rebate will remain.
When the NDP talks about its new credit, which it has branded as the $1,500 homeowners affordability tax credit, the government's messaging has focused on the many people who will pay less.
But the government is also asking higher-income individuals to shoulder a greater share of the tax burden, even if the NDP has been reluctant to say it.
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