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Back to basics
Sep 07, 2007

Back-to-school means getting back to discussing what is widely recognized by community groups and individuals across Manitoba as an inequitable taxation system.

Winnipegger Don Dunphy recognizes there is something inherently unfair in paying two local tax bills to fund education in the province. Dunphy said he is penalized for owning properties — one in Pembina Trails School Division and another in Lord Selkirk School Division.

Dunphy happens to be a recent cottage owner at Hillside Beach in the RM of Alexander. Purchasing beach property should have been a happy occasion, but when he opened his RM of Alexander taxbill, he was startled to discover he was asked to pay for something that he considers “wrong.”

“For my principle residence in Winnipeg, I pay $1,746.70 minus the $400 tax credit for a total of $1,346.70 for education taxes to Pembina Trails School Division, which works out to 66 per cent of my Winnipeg municipal taxes,” he said in an 

e-mail sent to the provincial government 

(a copy was sent to the WREN). “The problem I have is that my cottage is a seasonal property (May 24 to Thanksgiving) (and) I pay an additional $460.15 to the Lord Selkirk School Division, which works out to a whopping 166 per cent of my municipal taxes to the RM of Alexander. This is wrong!” he stressed.

“The property is not occupied during the period of time when the school is occupied and even if there was some rationale for paying any education taxes on the property, there is no way  that it should be so high.”

His e-mail urged Premier Gary Doer to move forward on tax reform to “correct this injustice.”

“I know education must be funded by taxpayers and I don’t mind paying my share but the current formula is flawed by funding education off my principle residence not to mention my cottage, which is outrageous. I am surprised that there is not a class action lawsuit on behalf of cottage owners, who have no business subsidizing rural education.”

The latter was a point stressed during the letspayfair.com campaign organized by the education funding coalition, which includes 40-plus groups such as the Manitoba Real Estate Association, WinnipegREALTORS®, the Keystone Agricultural Producers and the Manitoba Association of Cottage Owners.

During the last provincial election, the coalition organized a letspayfair lawn sign campaign to alert voters to the inequities existing in the present education funding system.

At the time, Dave Chubb, president  of the Manitoba Cottage Owners Association, told reporters that the problem in cottage country “is that there are no 

commercial businesses to help carry the cost of education (unlike in towns and cities), but if we paid for education through general revenues it would be fairer.”

The problem for cottage owners is that they are not only subject to a school tax double whammy, but they are also paying more taxes that give them no real benefits — in cottage country they are not eligible to vote in school board elections, nor can they be candidates in school board elections, nor can their children attend schools in the division where their cottage is located.

RM of Alexander councillor Ed Arnold also told Dunphy that cottage owners in provincial parks do not pay education taxes because they lease their land from the province — another sore point.

The e-mail sent by Dunphy to his local MLA was forwarded to Manitoba Education Minister Peter Bjornson. The reply he received from the minister left him disappointed: “I think the response dances around the issue and does not address the inequity of the current school tax system ...” 

Bjornson said in his reply to Dunphy: “Just as people pay income tax on all sources of income, property owners pay property tax, education or otherwise, on all their property holdings. Thus, excluding cottage owners from the payment of education property taxes on their cottage properties would result in unequal treatment between taxpayers who own cottages and those who do not.”

The education minister has failed to grasp the point that the present education funding system is by its very nature unfair. He makes the assumption that simply because someone owns a home and cottage they are rolling in dough, but that is not 

always the case. Cottages are also owned by hard-working middle-class families. And unlike income taxes  based upon ability to pay, funding education through property taxes does not take into account ability to pay. Does a senior on a fixed income have the same ability to pay property taxes as a professional whose salary increases every year? 

“Right now, about one-third of the 

entire education budget is being paid for on the backs of property owners,” said Keystone Agricultural president David Rolfe. “Farmers, seniors, families and business owners struggle to keep education adequately funded at the expense of their properties and farms because in many cases they are being taxed on debt.”

Bjornson correctly pointed out that the Doer government has made some inroads, including phasing out the province’s education support levy (now reduced by $100 million),  increasing the Manitoba Education Tax Credit from $400 to $525 this year (the province has promised to raise the credit to $700 by 2009) and instituting a Farmland Tax Rebate that reduces school taxes by 65 per cent (the promise is to raise the rebate to 80 per cent by 2010), but these should only be considered as stop-gap measures that inadequately address the real issue of a seriously flawed funding formula.

But these stop-gap measures are subject to the whims of school boards, as they have the authority to raise their own property taxes and have done so to the point of eroding any provincial credits or rebates. All the threats made by the education minister to enforce minimum tax increases when confronted by boards upping  their share of the taxation pie apparently have fallen on deaf ears.

Bjornson said different stakeholders and individual taxpayers “hold different points of views on the removal of local taxation.”

True. 

But the different views seem to merge (surveys reveal this) when it comes to recognizing there is inequity inherent within the existing funding system. 

As Dunphy said, the way education is now funded is “wrong.”