PCs say some middle-class Manitobans — not just the wealthy — will lose in education tax overhaul

Manitoba's Progressive Conservatives say the NDP government's planned overhaul to the education property tax model won't just leave the wealthy paying more in taxes, but middle-class households as well.

Tory finance critic Obby Khan tabled a number of property information sheets, accessible to Realtors, during question period Tuesday. They show Winnipeg homes that will be subject to higher education property taxes in 2025 include some of the average homes purchased in the city last month.

In March, the average sale price for a Winnipeg detached home was $417,102, according to the Winnipeg Regional Real Estate Board.

Meanwhile, the property listings tabled by the PCs show at least some homes that sold in March for $395,000 and above will face higher education property taxes next year.

"The facts clearly show, based on just the average MLS [Multiple Listing Service] listing, that Manitoba's middle-class will be paying more in education property taxes this year," Khan said.

He said he tabled listings on "houses in Lagimodiere, in Waverley, in Southdale, in River Heights, throughout Winnipeg and throughout Manitoba actually."

There's no set house price in which a Manitoba homeowner is guaranteed to pay more in education property taxes, since different school divisions set different mill rates. Taxes are also based upon the assessed value of a home, rather than the sale price.

Rebate out, credit in

Starting in 2025, the NDP government will scrap the existing package, introduced by the former PC government, that included a 50 per cent education tax rebate and a $350 property tax credit.

In its place, the NDP will introduce a single credit of up to $1,500 to all homeowners, meaning some will end up paying more, others less than they did under the old model.

Under the previous model, a homeowner paying $2,301 in gross school tax would get a total of $1,500 back through the 50 per cent tax rebate and the $350 property tax credit — meaning that homeowner will essentially see no change under the NDP's flat-credit system.

Homeowners whose taxes are above the $2,301 threshold will end up with a lower rebate than they previously got, while any Manitoba household subject to $1,500 of provincial property taxes or less in 2025 won't pay any provincial property taxes at all.

The province's budget documents state the province's average 2023 mill rate is 11.7, a number which is expected to climb by 2025. 

Documents tabled by Khan show Winnipeg homes above the $2,301 tax threshold include a four-bedroom River Heights home that sold for $395,000 and a three-bedroom in Riverbend purchased for $415,000.

The annual tax increase for those two homes will be less than $100, but Khan said the financial hit will grow if school divisions continue to raise taxes.

"I do appreciate that these homes are still … very expensive for some Manitobans, but there's also a lot of middle-class Manitobans" that'll end up paying more, he said.

Finance Minister Adrien Sala accused the Tories of distorting the facts by referring to the sale price of a home, which is often higher than the assessed value of the home used for determining property tax amounts. 

"We're going to see really the average Manitoban, and the vast majority of Manitobans, are going to do a lot better because of this straight $1,500 credit," Sala said in an interview Wednesday.

According to the finance department, 83 per cent of property owners "will do better" financially under the NDP's system, he said.

Over several days in question period, the PCs have tried to get NDP ministers to acknowledge the overhaul will amount to a tax increase for some households, but the government hasn't taken the bait. 

Budget documents state the province will rake in an additional $148 million through the tax change next year, as the NDP shifts more of the tax burden onto higher-income people.

The NDP's education property tax overhaul has run into opposition as well from the owners of rental properties, who will lose their rebate. The Professional Property Managers Association has warned landlords will have to raise rent to account for higher costs.

The government has promised assistance for at least some property owners left out of the new credit, once the new education funding model is in place next year.

Sala has previously said the government's measure will take care of small businesses, but hasn't provided details or explained how the government would define small businesses.