By Evelyn Jacks
Manitoba’s March 24 budget missed an important opportunity: to show how a province hard hit by tariffs from its southern neighbor can focus on a tax-smart strategy to propel economic growth and raise standards of living in an affordability crisis. Instead, we continue to raise income taxes across the board through bracket creep, and potentially fail to keep and attract highly educated workers who will call Manitoba home in the future. We do so at the peril of building a healthy tax base. We could, however, look west to go from good to great.
The Backdrop. For context, the top tax rate of 17.4% kicks in at $100,000 in Manitoba. That’s a low threshold. The highest earners, with taxable incomes over $253,414 in 2026, pay tax at a rate of just over 50% (federal and provincial combined). There aren’t that many of those top earners: just under 10,000 of them. The vast majority (67%) have incomes of $50,200 or less , and they form the broad base of taxpayers in Manitoba.
Further, the poverty line is just over $24,000 for a single person in Manitoba. That person will pay about $1300 in federal/provincial income tax in Manitoba. In Saskatchewan, the tax bill would be $832 and in Alberta $621. One of the reasons for the difference is the Basic Personal Amount is $15,780 in Manitoba, much lower than Saskatchewan’s $20,381 and Alberta’s $22,769.
Worse, last year the provincial government announced a hidden tax; known as bracket creep. The personal amounts and tax brackets are not indexed to inflation starting in 2025. That can push taxpayers into higher tax brackets sooner, and erode the value of tax credits, robbing the real value from a raise in income. It’s a way for governments to reduce their debt; but it’s also a drag on the economy, and an “anti-affordability” move.
In Saskatchewan, Lower Taxes. Saskatchewan, on the other hand, is raising its basic personal exemption, spousal exemption and equivalent-to-spouse amount under the Saskatchewan Affordability Act by $500 to $20,381. The child exemption is being increased and there will be a supplementary amount for seniors. A family of four will pay no provincial income tax on its first $65,000 of income. As well, all of these amounts are indexed.
The results? In 2024, Saskatchewan’s real GDP grew by an estimated 3.1–3.4%, putting it in the top tier of provincial growth. In 2025-2026 it’s growth rate is expected to be 2.1%, slightly behind Alberta’s top provincial growth rate of 2.3% . This compares to Manitoba’s low projected 1.3% growth rate. Saskatchewan also has one of Canada’s lowest debt ratios.
The Folly of Taxing the Top 1%ers. Politically speaking it’s always tempting to ask the “Top 1%” to pay more at budget time to help pay down debt and fund services. This time it was a property tax hike on million dollar homes. But that won’t help average Manitobans much. The bigger question is whether the Top 1% pay can for all the taxes society needs to operate?
The late federal Finance Minister Michael Wilson once quipped “Canada has an acute shortage of rich people ”, to emphasize that the answer is no, they can’t. In fact, this group already pays a disproportionate amount of tax.
According to the Fraser Institute, the top 20 per cent of income-earning families pay nearly two-thirds (62.7 per cent) of federal and provincial income taxes while earning less than half (46.4 per cent) of the country’s total income. Comparatively, the bottom 20 per cent of income-earning families pay 0.8 per cent of all personal income taxes.
Winnipeg’s Izzy Asper said it all when he wrote in his 1970 book, The Benson Iceberg: A Critical Analysis of the White Paper on Tax Reform in Canada, “The statistical evidence indicates that upper-bracket Canadians do not have capital and income in such significant amounts as to be capable of doing much for the lower-bracket group, even if all of their wealth were redistributed.”
Yet it is true that the rich do get richer even in a financial crisis. A 2014 OECD study, entitled “Focus on Top Incomes and Taxation in OECD Countries: Was the crisis a game changer?” found that the financial crisis of 2008 caused a temporary drop in top-1% incomes. But, in fact, those top incomes recovered quickly not just here, but in many countries.
Why is that? One reason is that top earners had higher wages, salaries, bonuses and stock options, which speaks to education, talent and risk-taking. But their incomes were also diversified and tax-efficient.
Lower earners tend to invest in interest-generating investments which are subject to high tax rates, similar to employment and pension income. Higher earners generated more passive income from their investments over time and it came from source such as dividends, capital gains, and rental income. This increased their wealth while averaging down their marginal rate of tax.
It’s noteworthy that in Canada, the richest of the rich receive about 20% of their income from capital investments; in France, that figure is almost 60%.
But the real game changer, was that after the 2008 financial crisis, top rates of personal taxes decreased in almost all the OECD countries. Why is that both important, and fair?
Economic Growth and Tax Reform. Canada has lagged far behind its peers in the G7, recording the slowest per capital income growth over the past decade. This not an “elbows up” achievement for us. Harmful taxation has had much to do with that.
In a paper published this month by the C.D. Howe Institute, entitled “Big Bang” Tax Reform: Unleashing Growth in the Canadian Economy , the learned authors envisioned a tax reform that would return prosperity through economic growth. Best of all, by restructuring the tax system, and reducing both personal and corporate taxes, they argue that we could raise living standards as a primary solution to the current affordability crisis. It’s worth a read.
From Good to Great. Here in Manitoba, we could quickly catch up to the best economic growth trajectory in the country, set by Alberta and Saskatchewan. But, to boost standards of living in an affordability crisis, and kick start the economy, it’s important to change course on tax policy.
We can remove the hidden taxes produced by bracket creep and raise the levels of the personal amounts. This would immediately put more money in worker’s pockets every two weeks to pay for healthy groceries, a comfortable home, and investments for a rainy day. It would also support the small businesses across the provinces, who are the backbone of Manitoba’s diverse economy.
It’s also worthwhile to consider who will pay the majority of taxes in the future. Tomorrow’s high income earners, are today’s highly educated graduates from our excellent educational institutes. They are in big demand both inter-provincially and internationally. By bringing back its now cancelled graduate tuition fee tax credit, Manitoba could encourage these young people to start their careers and families in our beautiful province, and put down roots.
In Short: We may just need to think bigger. Manitoba’s 2026 budget had three themes: Good Jobs. Lower Costs. Better Health Care. This was somewhat uninspiring for the times, considering the growth challenges our economy faces. Fostering an environment for great jobs and great talent to hold them, Manitoba could well be in first place for economic growth in the near future, with all the benefits that come from that: higher tax revenues, lower debt servicing costs, and more spending room for great, not just better health care, and other prized services in our society.
Evelyn Jacks is an award winning business leader, a tax literacy advocate, and best-selling author of 55 books on the subject of tax planning and family wealth management. Hear her podcast, Real Tax News You Can Use. Listen here or anywhere you do your streaming.