“All we’re asking is that the government fund education more fairly,” was Lorne Weiss’ message at a press conference held on Monday morning in a farmyard near East Selkirk.
The letspayfair.com 2011 campaign, launched by the Manitoba Education Financing Coalition (MEFC) on Monday, is a protest against the province’s heavy reliance on property taxes to fund education.
Those attending the launch were offered “I Want School Tax Off My Property” signs to take home and erect on their lawns as a prelude to the October 4 Manitoba election.
Weiss, the president of the Manitoba Real Estate Association, said the MEFC, representing 40 organizations and 250,000 Manitobans, is calling upon all three major political parties to commit to removing education funding from property taxes.
“We and thousands of Manitobans are telling the political candidates in this provincial election,” said Weiss, “that public education is everyone's responsibility. Let’s all pay by the same rules.”
The present funding formula is based on “an archaic system” that says people “who own land are wealthy,” said Weiss.
Weiss said the system isn’t fair because it’s not based on a homeowner’s ability to pay, similar to income or consumption taxes.
For homeowners, “how we each support education is based on your home debt,” which makes it an unfair tax, he added.
And, said Weiss, it penalizes seniors on fixed income who may have to consider leaving their homes because they can’t afford the education tax.
“It’s not fair that that there are 38 school divisions that all tax differently,” he added.
“It’s not fair that homeowners right across the street from each other with similar homes can pay different taxes just because they are in different school divisions.”
The result of the different taxation in school divisions is that 54 per cent of the annual tax bill Winnipeggers receive is school taxes (the other 46 per cent is municipal property taxes), while residents in some rural municipalities may pay school property taxes that are an even higher percentage of their tax bill.
The province’s school divisions raise approximately $650 million on top of the education grants received from the provincial government.
WinnipegREALTORS® president Ralph Fyfe said the city has frozen its property taxes for several years, but local school boards have at the same time raised their portion of property taxes, unfairly eliminating any savings that homeowners may have realized.
According to information provided by the coalition, eliminating education funding from property taxes means a saving of about $1,150 annually for a homeowner in Winnipeg School Division No. 1, based on the division’s mill rate and an average home price of $250,000.
Doug Chorney, the president of the Keystone Agricultural Producers, a member of the MEFC, said the goal of the coalition’s campaign is to have the party leaders and candidates during the election campaign promise to address the issue of fair education funding.
“If the candidates think that the small changes we’ve seen in education tax since the last election answer the call from Manitobans to pay fairly, they are wrong,” said Chorney at his family farm off Highway 59 where the letspayfair.com 2011 campaign was launched last Monday.
Chorney said the system of property education tax rebates and credits now in place to offset property taxes is merely “putting a bandage” on the issue.
“All that’s happening is we’re facing additional administrative costs rather than addressing the issue,” he added.
Chorney said a large acreage and plenty of production buildings does not mean a farmer is wealthy or reflect a farmer’s ability pay, as each farmer’s income is dictated by high production costs and the vagaries of international market forces.
At present, there is a $700 tax credit available to homeowners and an 80 per cent rebate is available on farmland, but farm buildings are still subject to education property taxes.
“Over the last few years, the province has played with removing ‘this tax levy’ and increasing ‘that education credit’ in a complicated game to fund education from property taxes,” he added. “Let’s make this simple and get education taxes off property.”
Ken Jones, the vice-president of the Manitoba Chambers of Commerce, another coalition member, said businesses, which do not a receive education property tax credit from the province, suffer from a litany of taxes, “of which education tax makes up a significant portion.”
In order for entrepreneurs to succeed in Manitoba, he said, it’s necessary to “create a tax climate” that allows businesses to flourish, which includes reducing the Manitoba government’s reliance on property tax to fund education.
With “fair” taxation, business owners would reinvest the “tax relief” they receive, which will benefit Manitobans by creating jobs, he added.
The goal of the coalition is to have the government begin the drive to “fairness” by funding 80 per cent of education from general revenues, and then proceed to eliminate the remaining 20 per cent of education funding from property taxes all together.
During a recent radio debate, all three parties indicated they are committed to 80-20 education funding, although neither a timeframe nor the methods to be employed to arrive at 80 per cent of education funding from general revenues were discussed.
“We want them (the candidates) to each propose a strategy on how they will do that (eliminate education taxation) in the next four years,” said Jones.
Coalition members acknowledged that the provincial government has taken some steps to alleviate the tax burden on property owners, but claim that Premier Greg Selinger’s assertion that the province already funds 77 per cent of the costs of education through general revenues involves some creative bookkeeping.
“The province will tell you they are close to 80 per cent,” said Weiss, “but to get to that figure, the province has bundled several things together like the costs from school buildings, contributing to teacher pension funds and tax credits.”
Weiss said the true funding figure is 65 per cent, reflecting the cost of “operating our school, the rest of it coming from property owners.”
Weiss said the Manitoba government’s own Frame Report, which tracked education spending, showed that the budget for school operating expenses for the fiscal year 2010-11 was $1.88 billion, but the provincial contribution was just $1.23 billion, or 65.4 per cent of spending, not 80 per cent.
In order to get to 100 per cent, Weiss is suggesting that the province use both general revenues and Manitoba Hydro reserves.
Conservative Leader Hugh McFadyen said his party is prepared to extend the $700 tax credit to cottage owners.
But Dave Crabb, the president of the Manitoba Association of Cottage Owners (MACO), said the proposal is just perpetrating the problem.
He said the existing system is “taxation without representation” for cottage owners, who, despite being taxed by the school boards where their cottages are located, are unable to vote in local elections or send their children to the schools in the division.
Cottage owners also pay school taxes on their principal residence, which means they are penalized by paying an “education tax a second time on their cottage property,” Crabb added.
The MEFC has printed 250 lawns signs which are expected to all be handed out by the end of the week.
The coalition is also urging all voters to send an electronic letter from the letspayfair.com website to their local provincial election candidates.
Artical from Sept 2011 Winnipeg Real Estate News
Visit http://www.letspayfair.com/ for more information on this issue.