by Errol Black and Shauna MacKinnon
In a recent review of income inequality in Manitoba, we compared Manitoba to Canada. The comparison showed that in 2010 “Manitoba was the most equal province before taxes and the third most equal after taxes.” In sum, Manitoba compared favourably with Canada as a whole and also other provinces.
That said, we argued that in the interests of improving economic and social conditions the federal government needed to take steps to reduce income inequality, including measures to strengthen trade unions, expanding the Canada Pension and Employment Insurance plans to provide greater income protection for retirees and unemployed workers, and establishing a national program to create improved labour market outcomes for Aboriginal peoples.
As well, we noted that there was more the Manitoba government could do to increase equality through changes to the tax structure and committing more resources to existing programs. We recommended specifically that the government add two additional tax brackets at the upper end of the personal income tax structure, which would, other things equal, increase equality, and raise taxes to generate increased revenues.
Unfortunately , however, legislation passed by a Progressive Conservative government in 1995 and subsequently carried forward with some amendments, by NDP governments, limited the ability of the government to make significant changes to its fiscal programs. Amongst other things the legislation requires the government to balance the budget over a four- year cycle and to hold a referendum to get approval for changes in the four major taxes – personal income, corporate income, sales and payroll.
Since we now have a situation where this legislation is an obstacle to addressing serious economic and social problems in Manitoba, we propose that the government either repeal the legislation, or, failing that, hold a referendum on gaining approval for increases in personal income taxes so that we can have an informed debate on the relevant issues.
There may be other options for getting rid of the current legislative encumbrances on government fiscal action that we are not aware of. If there are, we would like to hear about them.
What do you think about the relative merits of repeal vs. a referendum?