OTTAWA — The Pallister government is taking the unusual step of cutting taxes — a move other provinces led by conservatives have avoided as they try to craft a COVID-19 pandemic recovery.

OTTAWA — The Pallister government is taking the unusual step of cutting taxes — a move other provinces led by conservatives have avoided as they try to craft a COVID-19 pandemic recovery.

"Tax cuts don't raise revenue, they shrink it," said Allison Christians, chair of tax law at McGill University in Montreal. "It's a pretty simple calculation."

The 2021-22 Manitoba budget tabled Wednesday plans for $200 million in tax cuts, the bulk of which will come in a rebate to homeowners on education levies.

Finance Minister Scott Fielding after Budget 2021 was presented in the Manitoba Legislature on Wednesday.

KEVIN KING / POOL

Finance Minister Scott Fielding after Budget 2021 was presented in the Manitoba Legislature on Wednesday.

A day prior, neighbouring Saskatchewan announced it would slightly raise property taxes, to pay for education costs.

Saskatchewan is looking at using revenue from the federal carbon tax to replace existing levies, but isn’t planning on new tax cuts.

Alberta's February budget had some tax relief for the energy industry, and froze property taxes, but did not cut them.

Yet, in Manitoba, Tory Finance Minister Scott Fielding argued it makes more sense to lower the tax burden on households.

"By reducing taxes, we put more money on the kitchen table," Fielding said in his Wednesday budget speech.

"More money on the kitchen table means more money to spend in the economy. More money spent in the economy means more jobs."

Premier Brian Pallister announces new tax reductions at the Manitoba Legislative Building in Winnipeg.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS

Premier Brian Pallister announces new tax reductions at the Manitoba Legislative Building in Winnipeg.

“More money on the kitchen table means more money to spend in the economy. More money spent in the economy means more jobs.” — Tory Finance Minister Scott Fielding

Christians says it is a trickle-down ideology that doesn’t play out after a major economic crash.

"That doesn't actually work," she said. "We have all kind of evidence that shows that you don't get more revenue when you cut taxes; you just don’t."

Wednesday’s budget did promise more money for Manitoba's health-care system, and more funding for housing subsidies.

Manitoba has received increasingly generous federal transfers, which are based off the ability of provinces to generate revenue through taxes. That suggests the province is already using a lot of its ability to tax people.

Still, its new tax cuts makes it an outlier among other conservative-led provinces, such as Quebec and New Brunswick.

“That doesn't actually work. We have all kind of evidence that shows that you don't get more revenue when you cut taxes; you just don’t.” — Allison Christians, chair of tax law at McGill University

Ontario largely held the line on taxes, committing to avoiding raising them, while only making slight cuts (such as a 0.1 per cent drop in the education tax on commercial properties).

The eastern province instead focused on tax credits for things like job training and child care, which the Pallister government also put in its Wednesday budget.

Christians says these tax credits can nudge people to make the right choices, without entrenching the economic gaps that have emerged during the pandemic.

"I understand the idea that regular people have been really hurt by COVID, and a lot of people are out of work. But at the same time, a lot of people have been extremely enriched by the pandemic."

Monthly employment data from Statistics Canada show white-collar workers have largely held onto their jobs, with wage subsidies shoring up their employers’ transition to working from home and online sales.

“The government can cut taxes for some people ‐ but they should really be thinking about raising taxes, especially from those who have benefitted." — Allison Christians

However, those working in service sectors are seeing their employers close up shop, while young people still have lost far more jobs and paid hours of work.

"The government can cut taxes for some people — but they should really be thinking about raising taxes, especially from those who have benefitted," Christians said.

She noted in both world wars, governments implemented excess profits taxes to balance out the massive disparities, such as the swelling profits arms manufacturers recorded while the public rationed food.

Some have called for a similar tax on Big Tech or suppliers of personal protective gear.

"The pandemic has created windfalls for some people; they just all of a sudden get to enjoy a profit that they would not have gotten if there wasn't just a total disaster going on," Christians said, adding countries are probably more able to implement such measures.

She said all levels of government in Canada will have to find ways to manage economic growth, or end up with a hollowed-out safety net whenever the next major economic shock hits.

"When you let your tax system devolve, there's just less money to pay for public services and then people who need those things don't get them," she said.

"Those things get structurally baked-in, and people accept the idea that government should be starved, and then they are surprised when they don't see the services they want."

dylan.robertson@freepress.mb.ca