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Taxation shift
Nov 12, 2004

It’s a tax shift, not a tax grab.

That’s how the Winnipeg Real Estate Board and the Manitoba Real Estate 

Association want the province to see the elimination of education funding from property taxes.

Lorne Weiss, the chairman of the MREA’s political action committee and a member of the WREB, told Manitoba Education, Citizenship and Youth Minister Peter Bjornson, during a recent meeting with the WREB’s board of 

directors, that the present system isn’t transparent and creates mistrust and misunderstanding.

“If this is such a good model, why don’t you fund health care that way?” Weiss asked the minister. 

Weiss answered his own question 

by replying that, “It’s not a good model — it’s convoluted. Nobody understands it.”

Both real estate organizations are asking the province to take a serious look at the model and take into account that education is a societal benefit in the same vein as health care which is funded through general revenues.

“We don’t want to change the amount of funding or the quality of education. Nobody at this table wants to see a decrease in the quality of education,” said Weiss. “We want a shift in taxation. We have to convince the province that it’s a shift and not a tax grab.”

What worries a coalition created to lobby the government to reform the 

education funding system is that the measures presently undertaken by the province to reduce its own reliance on property taxes are being negated by local school boards. 

Even Bjornson admitted that, when the province commenced to eliminate its portion of property taxes for funding education, he had read that one school board reacted by publically announcing its intent to increase its share of taxation (actually, almost every school division in the province is making up taxation room abandoned by the province). 

“It bothers me that part of the strategy of one school board was to make up the provincial reduction in the Education Support Levy,” he told the directors. “The intent of the reduction was not 

to provide room for school boards to 

increase taxes. They must manage costs.”

There doesn’t seem to be much indication that school boards have actively considered managing costs, since their portion of the property tax bill has increased by about 33 per cent in the last few years. In fact, the school board tax increases have resulted in Winnipeggers paying 50 per cent of all taxes levied on property to school divisions. In some rural areas, the portion may approach 75 per cent or more.

To be fair, the province has been taking steps to reduce costs on property for education. The province has been slowly reducing its portion of the property tax bill since 2000. Thus far, $92 million has been reduced in the province’s share. The province has also increased the tax credit to Manitobans from $250 to $800 and the amount available to 

seniors as a tax credit to $800.

Bjornson said the province is also looking at other options to find a method of equitable funding for education, or at least keep the costs down 

for Manitobans. And, there have been other steps taken, though with mixed 

results.

Bjornson said administration costs have been capped by the province at four per cent in Brandon and Winnipeg. As well, the number of trustees in each school division is capped at seven which has resulted in a reduction by 100 since implementation. 

The most drastic measure taken was an amalgamation of school divisions across the province from 54 to 37, the aim being to reduce overall administration costs. It hasn’t quite worked out that way in the short term, but it may in the long term. 

The problem is that salaries, which make up about 85 per cent of a school division’s costs, have to be reconciled in the amalgamated divisions. One division may have had a lower cost for salaries before amalgamation while the other’s salaries were higher. Upon amalgamation, the lower salary schedule is not adopted, there is not even a middle ground established, instead salaries rise to the higher level.

“We know there’s an appetite for change, but it’s a $737-million (the 

portion the province provides for education) question and it’s not going to happen overnight,” said Bjornson. “We’re looking at a long-term solution. We’re looking at how we can fix it.”

The minister said the government is bound by balanced-budget legislation which makes it difficult to implement changes that potentially involve the provincial taxation system.

The Canadian Taxpayers Federation has its own take on the issue of funding education through property taxes which deals directly with the balanced-budget legislation. It is calling for school boards to be covered by the balanced budget legislation. That way, any increases contemplated by school boards will have to go to the people in the form of a referendum.

But, what was emphasized time and again at the meeting with the education minister is that no one expects the province to compromise the legislation by calling for more taxation — not even a provincial sales tax increase of one per cent suggested in an education task force report released on July 6 — all that is required is a shift of existing tax 

revenues.

Weiss also warned that there is a deadline for the shift “when the new city tax bill comes out.”

The tax bill he is referring to is the one to be issued for 2006 which will reflect the city’s new reassessment based on 2003 property values. Based upon new property values, the average homeowner can expect a reassessment 

increase of 23 per cent. It won’t necessarily mean that the city portion of property taxes will increase, because Mayor Sam Katz has promised a property tax freeze, but it could mean a substantial increase in taxes collected by school boards. 

“Historically, school divisions have shown no inclination to reduce their mill rate,” said Weiss.

It’s the mill rate which reflects whether a tax increase will occur. By promising to freeze property taxes, the city will adjust its mill rate accordingly, but school divisions could keep their mill rate the same as the previous year and taxes will jump upward as a result of the increased property values.

WREB president Cliff King said the cost of buying a home locally is still very affordable in relation to other Canadian cities. “But there is a perception that high property taxes have a negative connotation when people consider relocating here.”

Claudia Sarbit, a member of the WREB’s civic and legislative committee and a Seven Oaks School Division trustee, said a dialogue is required to make people understand the need to look at a different system of funding 

education. 

Sarbit said she has been knocking on doors in her division and finding that people are “very, very angry” about high property taxes.

“If they (the province) don’t find 

another way to feed this dog (education property taxes),” said MREA president Debbie Goodfellow, “it’s not going to go away — it’s simply going to get meaner.”