Rental housing landlords in Manitoba will receive a 25 per cent rebate on education property taxes this year, representing the first step in a provincial promise to remove education costs from the property tax base. As announced in the recently released 2021 Manitoba budget, that comes with a halt on allowable rent increases until 2024 in order to ensure that tenants can capture flow-through benefits from the resulting operational savings.
“If material improvements are made to a property, landlords will still be able to apply for an above-guideline rent increase,” the budget document advises. “The education property tax rebate amount received by landlords will be considered prior to approving an above-guideline rent increase.”
The Manitoba government estimates about $248 million from the education levy will be returned to taxpayers this year through 25 per cent rebates to residential/farm ratepayers and 10 per cent rebates to commercial/industrial ratepayers. Tax filers can also still claim existing education property tax credits, but eligible amounts will be reduced by 25 per cent.
Education property tax has additionally been frozen at 2020 levels in tandem with the government’s commitment for an extra $23 million in grants to the province’s various school districts. Ultimately, school districts will give up their taxing authority when the government fully implements its plan to directly fund education.
“Manitoba is the only Canadian jurisdiction that determines school taxes at the local level, which creates an uneven playing field across the province,” Manitoba Premier Brian Pallister noted earlier this month as he outlined the plan. “As we phase out the education property tax, we will ensure a more equitable system is in place to fund Manitoba’s education system and support students.”
Residential/farm ratepayers are also promised a 25 per cent rebate on their 2022 education property taxes, but the budget document is silent on future considerations for commercial ratepayers. For 2021, it explains that the latter group is receiving a proportionally smaller refund due to other offsetting factors including: various new business tax measures in the 2021 budget; the nearly $500 million that has been available through “broad-based and accessible business support programs in response to COVID-19”; and the fact that education property tax is a deductible business expense.
Meanwhile, the budget document presents two slightly different rationales for the two-year freeze on allowable rent increases — linking it to the tax rebate for landlords and framing it as COVID-19 relief. “The annual rent guideline will now be frozen through 2022 and 2023 to help Manitoba renters catch up after the pandemic,” Manitoba Finance Minister Scott Fielding stated in his budget speech.
Elsewhere, the budget document demonstrates the rough equivalency of landlords’ rebates and the savings tenants will realize through the two-year freeze on allowable rent increases, even factoring in the 25 per cent reduction in tax credits that tenants can claim. Applying a 1.6 per cent increase (the allowable amount for 2021) tenants currently paying monthly rent of $1,200 would have seen it rise to $1,219.20 in 2022 and to $1,238.71 in 2023.
The provincial government has pledged to redirect $11.6 million that otherwise would be channelled to education property tax credits into its Rent Assist program to help low-income renters obtain housing in the private market. In total, an additional injection of $22 million is budgeted for the program for 2021-22 , which Finance Minister Fielding describes as “the most generous such program in Canada”. As of March 2021, 7,945 households were enrolled.
“Rent Assist recipients will see an increase in their benefits between 2.4 per cent and 11 per cent, depending on the composition of their household,” Fielding reported in the budget speech.