March 10, 2020
Province Announces Payroll Tax Cut
– – –Changes Will Benefit an Estimated 1,000 Employers Throughout Manitoba: Fielding
As part of Budget 2020, the Manitoba government is providing employers with a break on the Health and Post-Secondary Education Tax Levy, commonly called the payroll tax, Finance Minister Scott Fielding announced today.
“Too many small businesses are paying payroll taxes, which penalizes those who can least afford it,” said Fielding. “It’s another form of bracket creep and it discourages entrepreneurship and costs jobs. Budget 2020 increases the payroll tax thresholds, which will result in more jobs and more opportunities for Manitobans.”
The Health and Post Secondary Education Tax Levy is imposed on wages paid by employers with a permanent establishment in the province. Approximately 3,000 employers in Manitoba pay around $510 million in payroll taxes per year.
As of Jan. 1, 2021, Manitoba will increase the following payroll tax thresholds:
• employers with an annual payroll of $1.5 million or less will be exempt (up from the current $1.25 million exemption threshold);
• employers with an annual payroll between $1.5 million and $3 million will pay 4.3 per cent on the amount within this range (up from the current range of $1.25 million to $2.5 million); and
• employers with an annual payroll above $3 million will pay 2.15 per cent of the total payroll (up from the current $2.5 million threshold).
The increased thresholds are expected to benefit approximately 1,000 employers in Manitoba, and make approximately 220 employers exempt from paying the tax altogether.
“We have heard from Manitoba business owners and operators that one of the key factors affecting business growth is the tax burden, in particular payroll taxes that affect business growth the most,” said Fielding. “We are addressing this concern with these changes to make Manitoba an even more attractive place to do business.”
Manitoba’s payroll tax thresholds have not changed since 2008.
“Initiatives like this one from the Manitoba government have meaningful impact on businesses like ours,” said Jamie Kozak, Principal Architect at Prairie Architects Inc., a business that will become exempt from paying the tax next year. “Raising the payroll tax exemption to $1.5 million allows our company to reinvest approximately $5,000 back into our business operations every year.”
Prairie Architects Inc. is leading the Fort Richmond Collegiate New Life Skills Suite and Band Room Addition and Renovations project, into which the provincial government is investing $1 million. Fielding visited the work site today to present a new pair of steel-toed work boots to Jaycek Valentine, a junior apprentice on the project.
This is the fifth year in a row where the Manitoba government carried on its tradition of presenting a new pair of shoes to a deserving Manitoban, rather than the finance minister purchasing himself new shoes to wear on budget day.
“These work boots symbolize one of our government’s priorities – to create more jobs for Manitobans and drive economic growth,” said Fielding. “Our Economic Growth Action Plan is growing optimism throughout the province and we are working to create 40,000 new jobs during the current term of government. We know we are on the right path, as approximately 9,700 more Manitobans were working in the first two months of 2020.”
Fielding will present Budget 2020 tomorrow afternoon in the Manitoba legislature.
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