Manitoba budget will ease payroll tax, include job-creation spending

Manitoba Premier Wab Kinew and Finance Minister Adrien Sala speak to media before the provincial budget is read at the Manitoba Legislature in Winnipeg, Tuesday, April 2, 2024. THE CANADIAN PRESS/John Woods

WINNIPEG — The Manitoba government is hiking capital spending and introducing new tax rules in a deficit budget aimed at safeguarding the province from tariffs imposed by United States President Donald Trump.

The NDP government said the threat of prolonged tariffs from the U.S. and China cannot be ignored, and new public spending and tax changes will protect jobs.

“We didn’t start this fight, but we are not backing down,” Finance Minister Adrien Sala told reporters Thursday.

“We’re Trump-proofing our economy.”

The budget boosts capital spending by hundreds of millions of dollars, including a four per cent boost to the highway budget and awarding municipalities four per cent of fuel tax revenues for arenas, playgrounds and other projects.

In an attempt to boost business investment, the NDP government is reducing the payroll tax paid by employers.

Starting in January, the threshold at which companies start paying the tax is to rise to $2.5 million of annual payroll, up from the current $2.25 million. The threshold at which another rate kicks in is to rise to $5 million from $4.5 million.

In terms of tariff retaliation, cars manufactured in China and Tesla automobiles — connected to Trump adviser Elon Musk — will no longer qualify for the provincial rebate on electric vehicles.

“It’s part of our government’s commitment to be elbows up,” Sala said.

The budget offers a range of cost savings, tax cuts and tax increases for Manitobans.

The provincial free birth control program, currently limited to prescription items, is being expanded to include the morning-after pill.

Entry fees to provincial parks are being waived for one year, although fees for camping and other activities will continue.

A new security system rebate for small and medium-sized businesses, worth up to $2,500 per business, will be offered to reduce crime.

An annual tax credit for homeowners will rise by $100 to $1,600, although the government will take in $182 million more than under a rebate system enacted by the former Progressive Conservative government and cut by the NDP.

Wage earners will feel an impact. Starting this year, income tax brackets and the basic personal exemption will be frozen and no longer rise with inflation. Someone earning more than $100,000 a year is expected to pay an extra $87 this year.

The budget projects a deficit of $794 million this year on total spending of $25.8 billion. If U.S. tariffs are sustained, hundreds of millions of dollars in support for businesses and agricultural producers would be offered, driving the deficit to almost $1.9 billion.

There were few details Thursday, but the government said aid could include loans and money for worker retraining.

Sala said the government remains committed to balancing the budget before the next election, expected in 2027. This year’s projected deficit is already well above the amount contained in last year’s long-term forecast.

The Opposition Progressive Conservatives criticized the $100 increase to the education property tax credit, saying it comes at a time when homeowners are facing property tax increases of several hundred dollars or more.

"This does not make a dent for a lot of Winnipeggers," Tory finance critic Lauren Stone said.

The Manitoba Chambers of Commerce said it welcomes the cut to the payroll tax but would like to see more details on what support the province will offer if tariffs are sustained.

"Businesses are looking for specific answers," group president Chuck Davidson said.

"If you're in manufacturing, if you're in agriculture, you know that the tariffs are already having an impact on you."

The Manitoba Federation of Labour said it welcomed many measures in the budget and supports the idea of helping businesses hit by tariffs, but there should be strings attached.

"The obligation that they need to return is they keep people employed," federation president Kevin Rebeck said.

A political analyst said the NDP government has shown little sign of containing spending in order to balance the budget.

“At some point in time, tough choices will definitely have to be made,” said Paul Thomas, professor emeritus of political studies at the University of Manitoba.

This report by The Canadian Press was first published March 20, 2025.

Steve Lambert, The Canadian Press