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Lost advantage
Jan 14, 2004

Prior to the New Year, a press conference was held under the auspices of 40 organizations, including the Winnipeg Real Estate Board and the Manitoba Real Estate Association. The message presented was clear: the current system of funding education through property taxes is broken and in dire need of a major overhaul.

The WREB and MREA have long been advocates of eliminating the use of property taxes as a source of revenue for education funding. They say that education is a societal benefit like health care and should be funded in a similar way by the province through general revenues.

High-profile organizations that have joined the WREB and MREA in expressing a strong desire for change include the Winnipeg and Manitoba chambers of commerce, the Canadian Taxpayers’ Association, the Keystone Agricultural Producers, the Canadian Federation of Independent Businesses, the Manitoba Hotel Association, the Manitoba Home Builders’ Association, and the Canadian Condominium Institute. 

This broad base of support should be a signal to the provincial government that discontent is growing.

During the news conference, Lorne Weiss, a former president of the WREB and now the chair of MREA’s political action committee, presented a compelling argument for the need for change:

“The current model of funding education through property taxes no longer works. It is based on economic and social realities from the 1950s that no longer exist. Then, ownership of property was an indicator of wealth. Residential property could not be purchased without a minimum of 25-per-cent down.

“Today, many of our young people, those we want to encourage to remain in Manitoba, are buying their first homes with five per cent or less down. Property and education taxes combined amount to approximately 2.75 per cent of assessed value or, in other words, we are taxing this group close to 60 per cent of their equity annually.

“As REALTORS, we are often invited into the homes of our senior citizens, many of whom are on fixed incomes. We are seeing more evidence of our senior population, those who helped build our society, being forced to forgo maintenance on their single greatest asset, their homes, in order to pay the high occupancy costs necessary in order to maintain that ownership.

“Although the cost of buying a home in Manitoba may be very low compared to other provinces, when we factor in these high occupancy costs and our wage scales, Manitobans have lost any economic advantage in buying and maintaining their homes.

“When we consider those Manitobans who choose to invest in Manitoba by buying commercial, investment or resort property as opposed to other forms of investment, it becomes clear that we are penalizing them by taxing their asset value without regard to debt or profit. And, to compound this injustice, we don’t even give these citizens the right to vote for the school trustees who set their taxes.

“The message that we are sending to the government today is that the current model is not workable. It does not recognize ability to pay as a basis for taxation. Ownership of property and land or rental is not an indicator of ability to pay. 

“This is not only a city of Winnipeg issue or an agricultural issue. This outdated method of funding education impacts on Manitobans throughout our province, whether they live in the rural areas or the urban areas — north or south. 

“It has serious implications on youth, seniors and low-income families as well as business investment. All Manitobans are concerned about maintaining a high quality of education and our diminishing ability to continue to adequately fund it under the present model.

“We are pleased to be a part of this broad-based coalition of almost 40 groups representing over 275,000 Manitobans who are now saying to the provincial government, ‘Show responsive leadership and listen to the people of Manitoba’.”

Opponents may argue that organized real estate has a vested interest in eliminating property taxes from education. Of course, it does. But, so do all Manitobans. As Weiss pointed out, it’s an issue that affects everyone.

And, without a complete overhaul of the system, the problem will continue to grow despite the province’s tinkering around the edges by offering tax breaks to homeowners and farmers. While the province tinkers, school boards are taking up the slack by increasing their share.  The school boards’ share has increased to over 50 per cent of the total school and municipal property taxbill in Winnipeg and accounts for an even greater percentage in some rural municipalities.