CME Response to the Manitoba provincial budget
Published by CME Manitoba on May 05, 2017
On April 11, the Manitoba government presented the provincial budget. Unlike it’s federal counterpart, the province’s budget contained fewer initiatives that directly support the manufacturing industry. CME applauds government efforts to reduce the deficit, although we would prefer that the budget was more assertive in its timeline.
Premier Pallister defied expectations and kept to modest austerity measures. The revised budget projects a deficit decrease this next year of only $32 million (total annual deficit down from $872 million to $840 million). While the budget was a slow and steady approach to addressing deficit challenges and growing the economy, there are several concerns related to manufacturing:
Research and development tax credit
Corporations that carry on eligible scientific research and experimental development in Manitoba are eligible for a Research and Development Tax Credit. The rate of this tax credit is reduced from 20 per cent to 15 per cent, effective for eligible expenditures made after April 11, 2017.
Manufacturing investment tax credit
Corporations can earn the Manufacturing Investment Tax Credit on eligible investments in manufacturing plant and equipment. The non-refundable portion of the credit is reduced from 2 per cent to 1 per cent effective for qualifying property acquired after April 11, 2017. This measure does not impact the 8% refundable portion of the credit. This credit is also extended to December 31, 2020.
While the provincial government has pledged not to increase taxes, left out of the budget was any mention of the proposed carbon tax – potentially priced at $30 per tonne, which translates roughly to over seven cents per litre of fuel. In addition to direct energy cost increases (along with the rapidly rising hydro rates), manufacturers are sure to be hit with fuel surcharges related to shipping products to markets.
CME continues to advocate for a responsible carbon reduction strategy that considers business competitiveness and the impact of carbon leakage to other jurisdictions, should the costs of a carbon tax in Manitoba result in lost manufacturing activity here. If the government does proceed with a made-in-Manitoba carbon tax to meet the federal mandate, it’s CME’s strong position that the tax must be revenue neutral mitigating the damage of a carbon tax which cannot be passed on to customers.
CME partner, BDO, has prepared a detailed budget summary. To discuss the impact the budget may have on your manufacturing operations, connect with CME and our partners at BDO at any time.