Manitoba politicians, like their counterparts in other provinces and on Parliament Hill, are showing a growing appetite for small, boutique tax credits that cover everything from youth hockey programs to public-speaking courses.
But there is growing skepticism about whether such tax credits succeed in encouraging more participation or in making programs more affordable for people struggling to make ends meet.
Richard Sigurdson, a political science professor at the University of Manitoba, says the biggest advantage of the credits may be political.
“They appeal to the very middle-class voters that, especially here in Manitoba right now, the two major parties are both out to attract,” Mr. Sigurdson said.
“By and large, these individuals are going to do this anyway. They’re going to send their kids to camp. They’re going to renovate the bathroom ... but this way the parties enjoy some benefit from supporting individuals in making choices that they were going to make anyway.”
Progressive Conservative Leader Hugh McFadyen recently made the first boutique tax credit promise of the Oct. 4 provincial election campaign. He said a Tory government would expand the province’s current income tax credit for children’s fitness programs to include adults.
The credit is a 10.8 per cent refund on costs of up to $500. People who keep receipts and file an income tax return can eventually be reimbursed up to $54.
New Democrat Leader Greg Selinger came out with a similar tax credit in the spring budget to cover children’s arts programs and personal development courses.
But such credits aren’t much use to low-income earners, says the Social Planning Council of Winnipeg, a group that stands up for the rights of the poor. The council points out that anyone who wants the credit still has to pay up front and wait months for a refund.
“A 10 per cent tax credit isn’t really going to make a big difference,” said Dennis Lewycky, the group’s executive director.
“People are facing housing issues and just keeping their kids in school. The costs now for a family to put their children in school and provide them with sports equipment ... far outweigh the small credit they’re going to get back.”
Low-income Manitobans already face a lower tax threshold than in most other provinces. The basic personal income tax exemption is $8,384 compared with $14,535 in Saskatchewan and $16,977 in Alberta.
Mr. Selinger admits a tax credit is more likely to help the middle class.
“A universal tax credit tends to benefit the broad middle class, first and foremost, because they can make the deduction,” he said.
But, he added, the government has boosted direct aid for low-income earners through programs such as First Sports, which provides one-time payments to non-profit community groups for athletic facilities.
Mr. McFadyen suggests tax credits work because they provide an incentive for people to participate in gym programs and other activities.
“It’s a practical and it’s an administratively efficient way of acknowledging the importance of fitness.” he said.
The Canadian Urban Transit Association questions the effectiveness of long-standing tax breaks in specific areas. The transit lobby group monitored ridership across the country before and after the federal government’s 2006 introduction of a 15 per cent tax credit on bus passes.
“The trends that we’ve seen over the last 10 years are an average increase of three or 3.5 per cent a year in ridership, and we haven’t seen any change in that rate after the tax credit was introduced,” said association president Michael Roschlau.
Manitoba Liberal Leader Jon Gerrard won’t be promising small tax credits during the election campaign.
“I think they have to be used with very considerable caution and people should be careful about taking these too seriously as more than PR stunts,” he said.
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