A new report on education funding in Manitoba is calling for the phasing out of the province’s education support levy (ESL) on commercial properties.
The Canadian Federation of Independent Business (CFIB) report, Education Tax Inequities in Manitoba, also recommends that the taxation authority now existing for school divisions be eliminated and fall under the jurisdiction of the provincial government.
In addition, the report calls for an education property tax credit, similar to the one now offered to homeowners.
“While businesses benefit from a skilled workforce,” said Ben Kolisnyk, a CFIB policy analyst and author of the report, “the question is: should they be paying five times more than residents on the same assessed value?”
He said increased school taxes this year means “commercial properties will be hit even harder.”
In 2012, according to the report, a commercial property owner paid on average 5.1 times more than a homeowner in education taxes on property of the same value of $200,000. In 2003, that ratio was 2.3.
“Despite overall increases in provincial funding,” according to the report, “higher operational spending and declining enrolment have resulted in school divisions raising taxes, exacerbating the education tax ratio.”
Using the example of Winnipeg School Division, the report indicated that on a property assessed at $200,000, a commercial property owner in 2012, without the benefit of the tax credit available to homeowners and with the addition of the ESL, paid a total of $3,500.03 in school taxes. On the other hand, a homeowner paid $700.70 on a property of the same value. Both totals do not include municipal taxes.
Commercial property owners pay education taxes on 65 per cent of their assessed value, compared to 45 per cent for residents. The report suggests a tax credit for commercial properties begin gradually and increase over time, as was the case with the credit given to residential property owners. The Education Property Tax Credit began in 2006 as a $250 rebate, increased to $400 in 2007 and then went up to $700 in 2013.
“Let’s be clear about what this report is not about. It’s not about determining the appropriate level of education funding, or assessing the quality of our education system,” said Janine Carmichael, CFIB’s director of provincial affairs for Manitoba. “It’s looking at the unfairness of how commercial property owners are treated compared to residential property owners for funding education.”
According to the report, while provincial policies are largely to blame for the significant and growing inequity, compounding the problem is significant tax increases in many Manitoba school divisions over the last several years.
“The results show that divisions have increased operational spending by 50 per cent since 2002, while enrolment for the same period decreased by three per cent,” said Kolisnyk.
Given the province’s fiscal situation, added Kolisnyk, the CFIB is not looking for immediate tax relief but a long-term plan to restore fairness to the way education is funded by eliminating the ESL for commercial properties and shifting taxing authority for education to the provincial government, particularly given that Manitoba is the last province in Canada to have school divisions with taxing authority.
WinnipegREALTORS® and the Manitoba Education Funding Coalition’s answer to the dilemma is to remove all funding for education off property and have the province fund education through general revenues, as is the case with health care.