Province Of Manitoba 18-K/A Annual report (foreign governments) (amended)

Exhibit 99.1

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SUMMARY BUDGET 2008/09

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SUMMARY BUDGET
For the Fiscal Year Ending March 31, 2009
With Comparative Data for the year ended March 31, 2008

							Per cent Change
							2008/09 Budget from
	2008/09		2007/08		2007/08		2007/08			2007/08
	Budget		Forecast		Budget		Forecast			Budget
			(Millions of Dollars)
REVENUE
Income Taxes		2,611		2,649		2,439		(1.4	%)		7.1	%
Other Taxes		3,320		3,317		3,249		0.1	%		2.2	%
Fees and Other Revenue		1,377		1,320		1,215		4.4	%		13.4	%
Federal Transfers		3,905		3,657		3,687		6.8	%		5.9	%
Net Income of Government Business Enterprises		668		858		686		(22.1	%)		(2.6	%)
Sinking Funds and Other Earnings		441		360		381		22.5	%		15.7	%
TOTAL REVENUE		12,324		12,161		11,657		1.3	%		5.7	%
EXPENDITURE
Health and Healthy Living		4,371		4,154		4,050		5.2	%		7.9	%
Education		3,250		3,107		3,066		4.6	%		6.0	%
Family Services and Housing		1,331		1,270		1,251		4.8	%		6.4	%
Community, Economic and Resource Development		1,478		1,413		1,385		4.6	%		6.7	%
Justice and Other Expenditures		992		1,078		943		(8.0	%)		5.2	%
Debt Servicing Costs		806		810		787		(0.5	%)		2.4	%
TOTAL EXPENDITURE		12,227		11,832		11,482		3.3	%		6.5	%
SUMMARY NET INCOME		96		329		175

NOTES:

• The 2007/08 Budget numbers originally presented in the 2007 Budget Address have been restated to be consistent with the current presentation for the Government Reporting Entity.

• Details of Revenue and Expenditure for Fiscal Year 2008/09 and a reconciliation to the amounts reported for Core Government are found in Schedules 1 and 2 (p. 6-7).

• Information on the structure of the Summary Budget may be found in Appendix 2 (p. 27).

• The 2007/08 Forecast is based on the Third Quarter Financial Report.

• Numbers may not add due to rounding.

B U D G E T  2 0 0 8  /  3

n SUMMARY BUDGET 2008/09

Budgeted Summary Net Income for the year is $96 million.

Revenue

Revenue in 2008/09 is projected to increase slightly over the 2007/08 Forecast, up 1.3% or $163 million.

Other Taxes are expected to grow by $3 million reflecting continued growth in retail sales taxes offset by decreases in Corporation Capital Tax due to rate reductions, and to Tobacco Tax and net education property taxes. Fees and Other Revenue will be up $58 million, while Net Income of Government Business Enterprises is expected to be down by $190 million. Federal Transfers will increase following steps taken by the federal government to address the fiscal imbalance; the new Equalization formula provides almost $238 million more; health and social transfers are up $76 million, while all other federal transfers combined decrease by $66 million from the 2007/08 forecast. Income Taxes will decrease $38 million primarily due to tax reduction measures.

Expenditure

Total expenditure is budgeted to increase $395 million, up 3.3%, from the 2007/08 Forecast.

The budgeted growth in Health and Healthy Living expenditure is $217 million, or 5.2 %, from the 2007/08 Forecast. Education-related expenditure is up $143 million, or 4.6% from the 2007/08 Forecast. Family Services and Housing expenditure is up $61 million, or 4.8% from the 2007/08 Forecast. Community, Economic and Resource Development expenditure will rise by $65 million, or 4.6%. Debt Servicing Costs are expected to drop by $4 million.*

In Budget 2008, services to people represent 76.3% of spending:

• Health and Healthy Living expenditure makes up 35.8% of total expenditure.

• Education accounts for 26.6% of all expenditure; it includes public schools and post-secondary institutions.

• Family Services and Housing and Justice represent 13.9% of total expenditure.

* Debt Servicing Costs are forecast to equal 6.5¢ of every dollar of revenue in 2008/09, down 50.8% from 13.2¢ per dollar in 1999/2000.

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Revenue, 2008/09
Major Sources
Per cent of Total

Numbers may not add due to rounding.

Revenue Sources
2008/09 and 2007/08
Millions of Dollars

					Change 2008/09
	2008/09		2007/08		from 2007/08
	Budget		Forecast		Forecast
Income Taxes		2,611		2,649		(38	)
Other Taxes		3,320		3,317		3
Fees and Other Revenue		1,377		1,320		58
Federal Transfers		3,905		3,657		248
Net Income of Government Business Enterprises		668		858		(190	)
Sinking Funds and Other Earnings		441		360		81
TOTAL REVENUE		12,324		12,161		163

Numbers may not add due to rounding.

B U D G E T  2 0 0 8  /  5

Expenditure, 2008/09
Major Sectors
Per cent of Total

Numbers may not add due to rounding.

Expenditure Sectors
2008/09 and 2007/08
Millions of Dollars

					Change 2008/09
	2008/09		2007/08		from 2007/08
	Budget		Forecast		Forecast
Health and Healthy Living		4,371		4,154		217
Education		3,250		3,107		143
Family Services and Housing		1,331		1,270		61
Community, Economic and Resource Development		1,478		1,413		65
Justice and Other Expenditures		992		1,078		(87	)
Debt Servicing Costs		806		810		(4	)
Total Expenditure		12,227		11,832		395

Numbers may not add due to rounding.

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Schedule 1
Summary Revenue Estimate: Details and Reconciliation to Core Government Estimates

Fiscal Year ending March 31, 2009 (in Thousands of Dollars)

	CORE GOVERNMENT		CONSOLIDATION IMPACTS
	Revenue		and Revenue of Other
Source of Revenue	Estimates		Reporting Entities			SUMMARY
Income Taxes
Individual Income Tax		2,312,100		—			2,312,100
Corporation Income Tax		299,200		—			299,200
Subtotal: Income Taxes		2,611,300		—			2,611,300
Other Taxes
Corporation Capital Tax		123,200		—			123,200
Gasoline Tax		137,000		—			137,000
Insurance Corporations Tax		63,500		—			63,500
Land Transfer Tax		43,600		—			43,600
Levy for Health and Education		344,400		—			344,400
Mining Tax		128,000		—			128,000
Motive Fuel Tax		90,100		—			90,100
Retail Sales Tax		1,469,400		—			1,469,400
Tax Administration and Miscellaneous Taxes		79,900		—			79,900
Tobacco Tax		170,000		—			170,000
Other Taxes		17,100		—			17,100
Education Property Taxes		—		654,284			654,284
Subtotal: Other Taxes		2,666,200		654,284			3,320,484
Fees and Other Revenue
Fines and Costs and Other Legal		44,091		—			44,091
Minerals and Petroleum		9,386		—			9,386
Automobile and Motor Carrier Licences and Fees		106,092		—			106,092
Parks: Forestry and Other Conservation		34,083		—			34,083
Water Power Rentals		105,000		—			105,000
Service Fees and Other Miscellaneous Charges		113,854		793,683			907,537
Revenue Sharing from SOAs		20,995		(20,995	)		—
Tuition Fees		—		171,200			171,200
Subtotal: Fees and Other Revenue		433,501		943,888			1,377,389
Federal Transfers
Equalization		2,063,400		—			2,063,400
Canada Health Transfer (CHT)		845,800		—			845,800
Canada Social Transfer (CST)		378,000		—			378,000
Health Funds		—		—			—
Infrastructure Renewal		50,000		—			50,000
Manitoba Floodway Expansion		75,233		—			75,233
Shared Cost and Other Transfers		199,606		293,460			493,066
Subtotal: Federal Transfers		3,612,039		293,460			3,905,499
Net Income of Government
Business Enterprises (GBEs)
Manitoba Liquor Control Commission		227,300		—			227,300
Manitoba Lotteries Corporation		301,200		—			301,200
Manitoba Hydro		—		160,000			160,000
Workers Compensation Board		—		1,214			1,214
Manitoba Public Insurance Corporation		—		(21,790	)		(21,790	)
Subtotal: Net Income of GBEs		528,500		139,424			667,924
Sinking Funds and Other Earnings		—		440,954			440,954
Total Revenue Estimate		9,851,540		2,472,010			12,323,550

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Schedule 2
Summary Expenditure Estimate: Details, Reconciliation to Core Government Estimates and Summary Budget Result

Fiscal Year ending March 31, 2009 (in Thousands of Dollars)

	CORE GOVERNMENT			CONSOLIDATION IMPACTS
	Expenditure			and Expenditures of Other
Sector/Department	Estimates			Reporting Entities			SUMMARY
Health and Healthy Living		4,133,022			238,389			4,371,411
Education
Advanced Education and Literacy		572,335			422,085			994,420
Education, Citizenship and Youth		1,409,138			846,149			2,255,287
Total Education		1,981,473			1,268,234			3,249,707
Family Services and Housing		1,196,763			134,310			1,331,073
Community, Economic and Resource Development
Aboriginal and Northern Affairs		40,580			248			40,828
Agriculture, Food and Rural Initiatives		217,051			161,710			378,761
Competitiveness, Training and Trade		119,121			6,162			125,283
Conservation		123,076			(241	)		122,835
Infrastructure and Transportation		527,011			(97,636	)		429,375
Intergovernmental Affairs		260,972			—			260,972
Science, Technology, Energy and Mines		81,060			5,444			86,504
Water Stewardship		33,361			(41	)		33,320
Total Community, Economic and Resource Development		1,402,232			75,646			1,477,878
Justice and Other Expenditures
Legislative Assembly		35,064			(8	)		35,056
Executive Council		2,848			—			2,848
Civil Service Commission		6,235			347			6,582
Culture, Heritage, Tourism and Sport		88,172			8,907			97,079
Employee Pensions and Other Costs		79,604			100,500			180,104
Finance		102,899			27,006			129,905
Healthy Child Manitoba		27,180			—			27,180
Justice		347,647			22,943			370,590
Labour and Immigration		49,046			8,817			57,863
Manitoba Seniors and Healthy Aging Secretariat		1,765			—			1,765
Enabling Appropriations		122,095			—			122,095
Other Appropriations		25,500			—			25,500
Less: Year-End Lapse		(65,000	)		—			(65,000	)
Total Justice and Other Expenditures		823,055			168,512			991,567
Debt Servicing Costs		262,500			543,105			805,605
Total Expenditure Estimate		9,799,045			2,428,196			12,227,241
Subtract: Total Expenditure Estimate (above) from Total Revenue Estimate (Schedule 1)		9,851,540			2,472,010			12,323,550
Net Result for the Year		52,495			43,814			96,309
Transfer to Debt Retirement Fund		(110,495	)		110,495			—
Transfer from Fiscal Stabilization Fund		60,000			(60,000	)		—
NET INCOME		2,000			94,309			96,309

B U D G E T  2 0 0 8  /  1 9

PROVINCIAL OUTLOOK

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Summary Budget Outlook

	2007/08			2008/09			2009/10			2010/11			2011/12
	Forecast			Budget			Projection			Projection			Projection
	Millions of Dollars
REVENUE
Core Government 1		9,592			9,852			10,142			10,443			10,801
Net Income of Government Business Enterprises (GBEs):
Manitoba Liquor Control Commission		218			227			233			240			246
Manitoba Lotteries Corporation		295			301			301			301			301
Manitoba Hydro		309			160			111			121			119
Workers Compensation Board		42			1			2			1			4
Manitoba Public Insurance Corporation		(6	)		(22	)		0			0			8
Subtotal		858			668			648			663			678
Less: Consolidation Adjustment		(513	)		(529	)		(534	)		(541	)		(547	)
Net Contribution of GBEs		345			139			113			122			130
Other Reporting Entities		2,224			2,333			2,347			2,383			2,415
TOTAL REVENUE		12,161			12,324			12,602			12,949			13,347
EXPENDITURE
Core Government Programs and Services		9,490			9,799			10,080			10,369			10,668
Other Reporting Entities		2,342			2,428			2,430			2,487			2,532
TOTAL EXPENDITURE		11,832			12,227			12,510			12,857			13,201
SUMMARY NET INCOME		329			96			92			92			146

Numbers may not add due to rounding.

NOTES:
1	Core Government revenue includes Net income of Manitoba Lotteries Corporation and Manitoba Liquor Control Commission; that income is eliminated in the Consolidation Adjustment.
•	Revenue and expenditure projections for GBEs and Other Reporting Entities are based on information provided by the entities.

B U D G E T  2 0 0 8  /  2 1

Change In Summary Net Debt
Millions of Dollars

			Other		Summary
	Core		Reporting		2008/09		2007/08
	Government		Entities		Budget		Forecast
Net Investment in tangible capital assets		460		126		586		586
Less:
Net result for the year		2		94		96		557	*
Change in Net Debt		458		32		490		29

* includes Other Comprehensive income of $228 million

Net Debt is an important indicator of a government’s financial position as it highlights the affordability of future government services. Net Debt may grow in absolute terms from time to time as needed investments in capital assets are made.

Budget 2008 demonstrates the government’s commitment to infrastructure and public asset renewal, with investments in hospitals, colleges, the Red River Floodway and Manitoba’s highway system. It is important though to measure changes in Net Debt against the growth in the economy, as measured by nominal GDP. The following table illustrates Net Debt, GDP and the ratio of Net Debt to GDP over the last several years.

					Net Debt
Fiscal Year	Net Debt		GDP		as a % of GDP
2003/04 Actual		11,129		37,354		29.8
2004/05 Actual		10,670		39,671		26.9
2005/06 Actual		10,520		41,372		25.4
2006/07 Actual		10,403		44,671		23.3
2007/08 Budget		11,130		45,981		24.2
2007/08 Forecast		10,432		47,832		21.8
2008/09 Budget		10,922		50,367		21.7

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APPENDIX 1
MANITOBA SUMMARY FINANCIAL STATISTICS

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Manitoba Summary Financial Statistics

	2008/09			2007/08			2006/07			2005/06			2004/05			2003/04
	Budget			Forecast			Actual			Actual			Actual			Actual
	(Millions of Dollars)
SUMMARY FINANCIAL STATEMENTS
Revenue
Income Taxes		2,611			2,649			2,441			2,322			2,244			2,091
Other Taxes		3,320			3,317			2,586			2,285			2,219			2,067
Fees and Other Revenue		1,377			1,320			1,520			1,552			1,398			1,316
Federal Transfers		3,905			3,657			3,317			3,103			3,156			2,723
Net Income (Loss) of Government Business Enterprises		668			858			627			958			679			(10	)
Sinking Funds and Other Earnings		441			360			529			505			444			473
Total Revenue		12,324			12,161			11,020			10,725			10,140			8,659
Expenditure
Health and Healthy Living		4,371			4,154			4,005			3,809			3,560			3,410
Education		3,250			3,107			2,396			2,291			2,309			2,220
Family Services and Housing		1,331			1,270			1,142			1,075			1,020			954
Community, Economic and Resource Development		1,478			1,413			1,281			1,526			1,169			1,095
Justice and Other Expenditures		992			1,078			831			820			755			757
Debt Servicing Costs		806			810			835			810			765			799
Total Expenditure		12,227			11,832			10,490			10,331			9,578			9,236
Summary Net Revenue (Expenditure)		96			329			530			394			562			(577	)
Provincial Borrowings, Guarantees & Obligations
General Government Programs		6,349			6,376			6,564			6,583			6,594			6,546
General Government Programs — Pension Liability		2,000			1,500			0			0			0			0
Manitoba Hydro		7,333			6,810			6,636			6,524			6,615			6,649
Other Crown Organizations		1,333			1,261			1,279			1,272			1,340			1,187
Health Facilities		963			866			790			767			739			615
Government Enterprises and Other		81			91			150			163			173			182
Capital Investments		1,415			1,080			749			464			363			321
Subtotal		19,474			17,984			16,168			15,773			15,824			15,500
Other Obligations
Pension Liability		4,611			4,394			4,159			3,967			3,761			3,571
Pension Asset Fund		(2,925	)		(2,258	)		(699	)		(537	)		(382	)		(267	)
Net Pension Liability		1,686			2,136			3,460			3,430			3,379			3,304
Debt incurred for and repayable by the Manitoba Hydro-Electric Board and Manitoba Lotteries Corporation		(6,898	)		(6,723	)		(6,163	)		(6,276	)		(6,215	)		(5,937	)
Education and Health Debt held by Government Enterprises		389			359			383			339			324			296
Other Debt of Crown Organizations		367			367			221			243			173			270
Subtotal		(4,456	)		(3,861	)		(2,099	)		(2,264	)		(2,339	)		(2,067	)
Total Provincial Borrowings, Guarantees & Obligations		15,018			14,123			14,069			13,509			13,485			13,433
Adjustments to arrive at Summary Net Debt
Guarantees		(367	)		(367	)		(675	)		(491	)		(660	)		(923	)
Net Financial Assets		(3,729	)		(3,324	)		(2,991	)		(2,498	)		(2,155	)		(1,381	)
Summary Net Debt		10,922			10,432			10,403			10,520			10,670			11,129
Summary Net Debt as percentage of GDP		21.7			21.8			23.3			25.4			26.9			29.8

Numbers may not add due to rounding.
NOTES:
•	Actual numbers for summary expenditures for 2006/07 and earlier do not include public schools as this information is not available in a GAAP format. The above results and the statistics associated with these results would change if public schools information was included.
•	The 2007/08 Forecast is based on the Third Quarter Financial Report.

B U D G E T  2 0 0 8  /  2 5

Manitoba Summary Financial Statistics

	2008/09			2007/08			2006/07			2005/06			2004/05			2003/04
	Budget			Forecast			Actual			Actual			Actual			Actual
	(Percentage Change)
Annual Change
Income Taxes		(1.4	)		8.5			5.1			3.5			7.3			11.3
Other Taxes1		0.1			28.3			13.2			3.0			7.4			4.7
Fees and Other Revenue		4.4			(13.2	)		(2.1	)		11.0			6.2			4.5
Federal Transfers		6.8			10.2			6.9			(1.7	)		15.9			12.9
Total Revenue		1.3			10.4			2.8			5.8			17.1			2.0
Health and Healthy Living		5.2			3.7			5.2			7.0			4.4			11.4
Education		4.6			29.7			4.6			(0.8	)		4.0			3.2
Debt Servicing Costs		(0.5	)		(3.0	)		3.0			5.9			(4.3	)		(7.6	)
Total Expenditure		3.3			12.8			1.5			7.9			3.7			5.3
Summary Net Debt		4.7			0.3			(1.1	)		(1.4	)		(4.1	)		7.5
	(Per cent)
Per cent of GDP
Income Taxes		5.2			5.5			5.5			5.6			5.7			5.6
Other Taxes1		6.6			6.9			5.8			5.5			5.6			5.5
Fees and Other Revenue		2.7			2.8			3.4			3.8			3.5			3.5
Federal Transfers		7.8			7.6			7.4			7.5			8.0			7.3
Total Revenue		24.5			25.4			24.7			25.9			25.6			23.2
Health and Healthy Living		8.7			8.7			9.0			9.2			9.0			9.1
Education		6.5			6.5			5.4			5.5			5.8			5.9
Debt Servicing Costs		1.6			1.7			1.9			2.0			1.9			2.1
Total Expenditure		24.3			24.7			23.5			25.0			24.1			24.7
Summary Net Debt		21.7			21.8			23.3			25.4			26.9			29.8
Per cent of Revenue
Income Taxes		21.2			21.8			22.2			21.7			22.1			24.1
Other Taxes1		26.9			27.3			23.5			21.3			21.9			23.9
Fees and Other Revenue		11.2			10.9			13.8			14.5			13.8			15.2
Federal Transfers		31.7			30.1			30.1			28.9			31.1			31.4
Net Income (Loss) of Government Business Enterprises		5.4			7.1			5.7			8.9			6.7			(0.1	)
Sinking Funds and Other Earnings		3.6			3.0			4.8			4.7			4.4			5.5
	(Dollars)
Dollars Per Capita
Total Revenue		10,315			10,247			9,350			9,133			8,661			7,452
Total Expenditure		10,234			9,970			8,900			8,797			8,181			7,948
Debt Servicing Costs		675			683			709			691			655			688
Summary Net Debt		9,142			8,790			8,826			8,958			9,114			9,577
Memorandum Items
Population (000’s) *		1,194.6			1,186.7			1,178.5			1,174.2			1,170.6			1,161.9
GDP at Market Prices		50,367			47,832			44,671			41,372			39,671			37,354

Source: Manitoba Finance
*	official population July 1
1	Other Taxes for 2006/07 and earlier do not include property taxes charged by public school divisions.

Budget Paper B

SUPPLEMENTARY
FINANCIAL INFORMATION

SUPPLEMENTARY FINANCIAL INFORMATION

Contents

INTRODUCTION	1
SPECIAL ACCOUNTS	1
Fiscal Stabilization	1
Debt Retirement	2
Pension Assets	3
Summary of Account Activity	4
CAPITAL INVESTMENT — REPLACEMENT VALUE OF PUBLIC ASSETS	6
CAPITAL INVESTMENT — CORE GOVERNMENT	7
LOAN REQUIREMENTS	9
PROVINCIAL BORROWINGS, GUARANTEES AND OBLIGATIONS	10
Borrowing Requirements	10
Provincial Borrowings, Guarantees and Obligations	11
INTERPROVINCIAL COMPARISONS	12

B U D G E T  2 0 0 8  S u p p l e m e n t a r y  F i n a n c i a l  I n f o r m a t i o n  /  B 1

n INTRODUCTION

This Budget Paper provides supplementary information on Manitoba’s special accounts — the Fiscal Stabilization, Debt Retirement and the Pension Assets funds — and on Capital Investment, Loan Requirements, and Borrowing Requirements.

n SPECIAL ACCOUNTS

Fiscal Stabilization

The fund is projected to have a total balance of $683 million as at March 31, 2008, after a draw of $37 million for wait-times reduction and other health-related programming, with no draw required for general requirements. The health programs component balance will be $144 million, while the general programs component will end 2007/08 with a $539 million balance.

The budgeted draw in 2008/09 is $47 million for wait-times reduction and other health-related programming, and $13 million for general requirements related to ecoTrust funds advanced by Canada in 2007/08. The health programs component balance as at March 31, 2009 is projected to be $101 million. The general programs component is projected to end 2008/09 with a $542 million balance.

Fiscal Stabilization
Revenue, Expenditure and Balance
Projection as at March 31, 2009 and March 31, 2008
Millions of Dollars

	2008/09			2007/08
	Budget			Forecast
Total Balance, Beginning of Year		683			663
Health Programs
Balance, Beginning of Year		144			175
Interest Earnings		4			6
Core Government Transfers
Wait-Times Reduction and Other Health-Related Programming		(47	)		(37	)
Balance, End of Year		101			144
General Programs
Balance, Beginning of Year		539			488
Interest Earnings		14			23
Core Government Transfers
General		2			28
ecoTrust		(13	)		0
Balance, End of Year		542			539
Total Balance, End of Year		643			683

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Debt Retirement

In 2008/09, a deposit of $110 million will be made for debt retirement.

As required by legislation, the fund was collapsed in 2004/05, leaving a nil balance at the beginning of 2005/06. The Allocation Committee has determined that $85 million of the deposit will be transferred to the Pension Assets Fund, leaving a balance of $78 million at March 31, 2008.

Interest earnings for 2008/09 are expected to be approximately $2 million.

In 2008/09 it is anticipated that the allocation will be $85 million to pension liability.

Debt Retirement
Revenue, Expenditure and Balance
Projection as at March 31, 2009 and March 31, 2008
Millions of Dollars

	2008/09			2007/08
	Budget			Forecast
Balance, Beginning of Year		78			51
Revenue
Core Government Transfer		110			110
Interest		2			2
		112			112
Expenditure
Transfer to Pension Assets Fund		(85	)		(85	)
Balance, End of Year		105			78

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Pension Assets

It is anticipated that $85 million will be allocated to the Pension Assets Fund for 2008/09. The balance will increase for 2008/09 as a result of the Manitoba Government’s commitment to set aside $500 million to commence funding of the province’s unfunded liability for the Civil Service Superannuation Fund (CSSF).

The fund will have net investment earnings of $26 million in 2007/08. The Budget projects a return of $170 million in 2008/09.

The fund is expected to have a balance of $2,925 million by the end of the 2008/09 fiscal year.

Pension Assets
Contributions, Transfers and Balance
Projection as at March 31, 2009 and March 31, 2008
Millions of Dollars

	2008/09			2007/08
	Budget			Forecast
Balance, Beginning of Year		2,258			699
Contributions
New Investment		500			1,502
Debt Retirement Fund		85			85
Net Investment Earnings		170			26
Departments and Crown Corporations		16			13
		771			1,626
Transfers
TRAF and CSSF payments		(104	)		(67	)
Balance, End of Year		2,925			2,258

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SUMMARY OF ACCOUNT ACTIVITY

	2008/09			2007/08			2006/07			2005/06			2004/05			2003/04			2002/03
	Budget			Forecast			Actual			Actual			Actual			Actual			Actual
							(Millions of Dollars)
Fiscal Stabilization
Transfers to Fund		0			0			110			31			405			13			4
Transfers from Fund		(58	)		(9	)		0			0			0			(171	)		(22	)
Redemption of Repap Preferred Shares
Transfer re: Manitoba Telephone System
Investment Revenue		18			29			21			15			2			1			7
Balance, End of Year		643			683			663			532			486			79			236
Debt Retirement
Contribution		110			110			110			110			99			96			96
Interest Earnings		2			2			1			0			2			7			3
Transfers to Pension Assets Fund		(85	)		(85	)		(85	)		(85	)		(79	)		(75	)		(48	)
Transfer for General Purpose Debt Reduction														(202	)
Balance, End of Year		105			78			51			25			0			180			152
Pension Assets
Transfers from Debt Retirement Fund		85			85			85			85			79			75			48
Net Investment Earnings		170			26			67			61			31			38			(6	)
Net Current Service Contributions		(88	)		(54	)		10			8			6			3			2
TRAF/CSSF Funding		500			1,502
Balance, End of Year		2,925			2,258			699			537			383			267			151

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	2001/02			2000/01			1999/00			1998/99			1997/98			1996/97		1995/96
	Actual			Actual			Actual			Actual			Actual			Actual		Actual
	(Millions of Dollars)
Fiscal Stabilization
Transfers to Fund		63			40			11			31			76			91		157
Transfers from Fund		(150	)		0			(185	)		(186	)		(100	)		0		0
Redemption of Repap Preferred Shares																			20
Transfer re: Manitoba Telephone System																	265
Investment Revenue		14			15			12			17			11			11		3
Balance, End of Year		247			320			265			427			565			577		210
Debt Retirement
Contribution		96			96			75			150			75			0		0
Interest Earnings		5			0			0			4			1
Transfers to Pension Assets Fund		(75	)		(21	)		0			0			0
Transfer for General Purpose Debt Reduction								(305	)
Balance, End of Year		101			75			0			230			76
Pension Assets
Transfers from Debt Retirement Fund		75			21
Net Investment Earnings		2			0
Net Current Service Contributions		9			0
TRAF/CSSF Funding
Balance, End of Year		107			21

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n CAPITAL INVESTMENT – REPLACEMENT VALUE OF PUBLIC ASSETS

Over the years, Manitoba’s communities and the economy have benefited from many investments in general assets such as schools, health facilities and public service buildings as well as infrastructure assets such as roads, water control structures and parks. To meet the needs of today’s and future generations it is necessary to invest in renewal of the current assets. These assets have contributed to vital public services, including learning, health, physical access and electronic access to other government programs, as well as providing the infrastructure for economic and community development. The public good provided by these investments is immeasurable; however, it is estimated that the insured or replacement value of these investments exceeds $31 billion.

Replacement Value of Public Assets¹

Per cent of Total

Total Value: $31.5 billion

Note 1: Excludes municipal assets and assets of government business enterprises such as Manitoba Hydro.

              Indirect Assets: 57.3%      Direct Assets: 42.7%

Totals may not add due to rounding.

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n CAPITAL INVESTMENT – CORE GOVERNMENT

Provincially owned capital assets such as highways, waterways, buildings, machinery and computer systems are amortized over their useful life based on established guidelines for amortization (see Appendix B of the 2008/09 Estimates of Expenditure). The amortization and interest costs are borne by departments that are responsible for each asset and are reflected as annual costs related to capital assets. Capital grants are also provided to third parties such as municipalities, schools and universities as contributions toward capital projects. In total, costs related to capital assets are estimated at $524 million in 2008/09, an increase of $37 million from 2007/08.

Capital Grants and Costs Related to Capital Assets,
Core Government 2008/09
(Thousands of Dollars)

	2008/09		2007/08
	Budget		Budget
Capital Grants		282,304		262,331
Infrastructure Assets		170,747		156,096
General Assets		71,308		69,316
		524,359		487,742

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Authority for the annual cost to acquire provincially-owned assets is reflected as Part B – Capital Investment which totals $579 million in 2008/09, a decrease of $16 million from 2007/08, largely due to reduced activity related to the Manitoba Floodway Expansion; offset by $15 million for increased investment in provincially-owned buildings and more than $10 million for increased investment in provincial roads and highways.

Capital Investment,
Core Government 2008/09
(Thousands of Dollars)

	2008/09		2007/08
	Budget		Budget
General Assets
Government Services Capital Projects		88,000		73,098
Transportation Equipment and Other Capital		23,719		14,463
Information Technology Projects		23,719		14,463
Corporate Information Technology Projects		13,969		12,676
Competitiveness, Training and Trade		1,030		2,421
Family Services and Housing		900		2,708
Health and Healthy Living		1,500		100
Infrastructure and Transportation		392		905
Justice		1,364		3,608
Other Projects		650		1,258
Other Equipment and Buildings		4,553		10,733
		136,077		121,969
Infrastructure Assets
Provincial Roads, Highways and Airport Infrastructure		249,883		239,655
Manitoba Floodway Expansion		172,009		213,792
Water Control Infrastructure		11,400		10,183
Parks, Cottage and Camping Projects		9,711		9,711
		443,003		473,340
Total Capital Investment		579,080		595,309

B U D G E T   2008  S u p p l e m e n t a r y  F i n a n c i a l  I n f o r m a t i o n  /  B 9

n LOAN REQUIREMENTS

Incremental Capital Authority Requirements for Non-Budgetary Programs, 2008/09
(Thousands of Dollars)

The Loan Act, 2008
The Manitoba Hydro-Electric Board	786,000
Manitoba Agricultural Services Corporation	132,949
Health Capital Program	118,109
Manitoba Opportunities Fund	104,719
Manitoba Housing and Renewal Corporation	62,647
Post-Secondary Institutions	53,200
The Manitoba Lotteries Corporation	46,750
Special Operating Agencies Financing Authority – Fleet Vehicles Agency	18,900
The Manitoba Water Services Board	13,048
Manitoba Student Aid Program	10,110
Rural Economic Development Initiatives	5,844
Communities Economic Development Fund	5,150
Special Operating Agencies Financing Authority – The Property Registry	4,000
Travel Manitoba	1,500
Diagnostic Services Manitoba	1,189
Special Operating Agencies Financing Authority – Pineland Nursery	1,137
Leaf Rapids Town Properties Inc.	1,000
Special Operating Agencies Financing Authority – Companies Office	450
Manitoba Film Guarantee Program	197
	1,366,899

Non-Budgetary Capital Programs 2008/09
(Thousands of Dollars)

The Manitoba Hydro-Electric Board	1,056,000
Health Capital Program	249,181
Manitoba Agricultural Services Corporation	138,400
Manitoba Housing and Renewal Corporation	98,628
The Manitoba Lotteries Corporation	96,400
Manitoba Opportunities Fund	75,000
Post-Secondary Institutions	70,289
Business Support	34,320
Manitoba Student Aid Program	31,828
The Manitoba Water Services Board	31,416
Special Operating Agencies Financing Authority – Fleet Vehicles Agency	25,737
Diagnostic Services Manitoba	18,367
Communities Economic Development Fund	8,500
Rural Economic Development Initiatives	4,200
Miscellaneous Corporations, Agencies and Other Programs	13,666
	1,951,932

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n PROVINCIAL BORROWINGS, GUARANTEES AND OBLIGATIONS

Borrowing Requirements

Manitoba’s long term borrowing requirements with respect to both general and self-sustaining borrowings is estimated to total $2.8 billion in 2008/09, of which $1.5 billion is required for refinancing purposes. New cash requirements of $1.4 billion are required for capital investments including the Manitoba Floodway Expansion, Manitoba Hydro and for the initial funding of the unfunded pension liability for the Civil Service Superannuation Plan. The Loan Act, 2008 provides incremental capital authority of $1.4 billion.

Borrowing Requirements, 2008/09

(Thousands of Dollars)

			New Cash		Estimated		Borrowing
	Refinancing		Requirements		Repayments		Requirements
Government Business Enterprises
Manitoba Hydro		606,746		600,000		—		1,206,746
Manitoba Lotteries		—		27,000		—		27,000
Subtotal		606,746		627,000		—		1,233,746
Other Borrowings
General Purpose Borrowings		785,586		—		—		785,586
Capital Investments General Assets		96,580		—		—		96,580
Capital Investments Infrastructure Assets		—		334,600		—		334,600
Civil Service Superannuation Plan		—		250,000		—		250,000
Health Facilities		2,000		97,000		61,500		37,500
Business Start Programs		—		30,000		—		30,000
Other Crowns and Organizations		—		15,000		—		15,000
Subtotal		884,166		726,600		61,500		1,549,266
Total Borrowing Requirements		1,490,912		1,353,600		61,500		2,783,012

B U D G E T   2008   S u p p l e m e n t a r y  F i n a n c i a l  I n f o r m a t i o n  /  B 1 1

n PROVINCIAL BORROWINGS, GUARANTEES AND OBLIGATIONS

The table below provides information on total provincial borrowings, guarantees and obligations that are forecast to be outstanding at the end of the 2007/08 fiscal year compared to the 2006/07 fiscal year.

The total of outstanding borrowings, guarantees and obligations reflects the Province’s gross borrowing obligations, but as it does not take into consideration financial assets available to pay down those obligations, it does not represent net debt. According to the Canadian Institute of Chartered Accountants and their public sector arm, the Public Sector Accounting Standards Board, net debt is promoted as the national standard of a government’s financial position. Net debt represents the difference between total liabilities and financial assets. Summary Net Debt to GDP continues to decline. It should also be noted that the total of outstanding provincial borrowings fluctuates during the fiscal year as a result of the timing of borrowing activities of the Province.

Provincial Borrowings, Guarantees And Obligations

	Forecast 2007/08						Actual 2006/07
	$ millions			$ Per Capita1			$ millions			$ Per Capita1
Gross Borrowings		21,507			18,019			19,548			16,587
Guarantees and Obligations		680			570			1,407			1,194
Less: Sinking Fund and Debt Retirement Fund Investments		(4,203	)		(3,521	)		(4,787	)		(4,062	)
Total Outstanding Provincial Borrowings, Guarantees and Obligations		17,984			15,067			16,168			13,719

Outstanding borrowings, guarantees and obligations are for the following purposes:

	$ millions		$ Per Capita1		$ millions		$ Per Capita1
General Government Programs		6,376		5,342		6,564		5,570
Manitoba Hydro		6,810		5,705		6,636		5,631
Other Crown Organizations		1,261		1,056		1,279		1,085
Health Facilities		866		726		790		670
Government Enterprises and Other2		91		76		150		127
Capital Investments		1,080		905		749		636
Subtotal		16,484		13,810		16,168		13,719
General Government Programs – Pensions3		1,500		1,257		—		—
Total Outstanding Provincial Borrowings, Guarantees and Obligations 4		17,984		15,067		16,168		13,719

1.	Per Capita data is based upon population figures at January 1, 2008 for 2007/08, and at July 1, 2006 for 2006/07 as reported by Statistics Canada.
2.	Includes amounts owed to the federal government and long term loans payable to government enterprises.
3.	In 2007/08, the Government made a contribution of $1.5 billion to the Teachers’ Retirement Allowances Fund (TRAF). This contribution reduced the Government’s net pension liability for TRAF from $2,164 million to $651 million.
4.	The increase is primarily due to the funding of the Province’s contribution to its liability for TRAF, capital investments and health facilities borrowings. Manitoba Hydro’s capital program borrowings were partially offset by the impact of a stronger Canadian dollar and its sinking fund contribution.

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n INTERPROVINCIAL COMPARISONS

FMS Total Expenditure

Statistics Canada prepares reports of government financial data using a standardized definition of government designed to facilitate comparability between jurisdictions, known as Financial Management Statistics (FMS). The FMS estimates of total expenditure are shown below.

2006/07	2003/04
Source: Statistics Canada	Source: Statistics Canada

FMS Program Expenditure

Statistics Canada’s FMS data on program expenditure is defined as government spending excluding debt costs, primarily interest on the public debt. (Total expenditure minus debt costs equals program expenditure).

2006/07	2003/04
Source: Statistics Canada	Source: Statistics Canada

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Major Federal Cash Transfers Change from 1999/2000 to 2008/09	Provincial Health Expenditure by Province, 2007/08f
Note: This presentation includes Offshore Accord                payments to NL and NS	f - Forecast
Source: Finance Canada	Source: Canadian Institute for                Health Information

Net Tax Supported Debt to GDP
Ratio by Province, 2007

          Source: Standard and Poor’s

Budget Paper C

TAXATION
ADJUSTMENTS

TAXATION ADJUSTMENTS

Contents

SUMMARY OF 2008 TAX MEASURES	1
PERSONAL TAX MEASURES	2
EDUCATION PROPERTY TAX CREDIT BASIC AMOUNT	2
PERSONAL INCOME TAX	2
Rate and Bracket Changes	2
Basic Personal, Spousal, and Eligible Dependent Amounts	3
Tax-Free Savings Accounts	3
Primary Caregiver Tax Credit	4
Personal Tax Credit	4
Community Enterprise Development Tax Credit	5
Northern Residents Deduction	5
Manitoba Mineral Exploration Tax Credit	5
RETAIL SALES TAX	5
Smoking Cessation Products	5
BUSINESS TAX MEASURES	6
CORPORATION INCOME TAX	6
General Rate	6
Small Business Rate	6
Capital Cost Allowance Rates for Manufacturers	7
Co-op Education and Apprenticeship Tax Credits	7
Film and Video Production Tax Credit	8
Manufacturing Investment Tax Credit	8
Interactive Digital Media Tax Credit	9
Book Publishing Tax Credit	9
Community Enterprise Investment Tax Credit	10
CORPORATION CAPITAL TAX	10
RETAIL SALES TAX	11
Selected Business Items	11
GREEN MEASURE	11
EMISSIONS TAX ON COAL	11
TECHNICAL AND ADMINISTRATIVE MEASURES	11
CONTACTS FOR FURTHER INFORMATION	12
PERSONAL TAX SAVINGS SINCE 1999	13
MANITOBA INCOME TAX SAVINGS FOR TYPICAL TAXPAYERS	14
MANITOBA INCOME TAX SINCE 1999	15
2008 INTERPROVINCIAL COMPARISON OF TAX RATES	16
FEDERAL AND MANITOBA INCOME TAX RATES, 2008	16
APPENDIX: MANITOBA TAX EXPENDITURES 2007/08	18

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n	SUMMARY OF 2008 TAX MEASURES
	All amounts are revenue reductions or expenditure increases

	2008/09		Full Year
	(Millions of Dollars)
Ongoing Tax Reductions1
Personal Tax Reductions		39.6		39.6
Business Tax Reductions		61.2		68.0
Farmland School Tax Rebate2		2.2		2.2
		103.0		109.8
Personal Tax Measures
Education Property Tax Credit Basic Amount increased2		24.5		24.5
Personal Income Tax Rate and Bracket changes		3.7		14.8
Basic Personal and Spousal Amounts increased		1.8		7.0
Tax-Free Savings Accounts introduced3,4		0.2		5.7
Primary Caregiver Tax Credit introduced		1.0		5.4
Personal Tax Credit increased2		0.6		2.3
Community Enterprise Development Tax Credit extended2		0.2		0.6
Northern Residents Deduction increased4		0.4		0.4
Retail Sales Tax eliminated on smoking cessation products		0.4		0.4
Manitoba Mineral Exploration Tax Credit extended		0.1		0.4
		32.9		61.5
Business Tax Measures
Corporation Capital Tax phased out		14.4		59.2
Corporation Income Tax General Rate reduced		3.5		28.4
Small Business Rate reduced		2.8		9.7
Capital Cost Allowance Rates for Manufacturers4		0.7		8.7
Journeypersons Hiring Incentive introduced		0.0		4.8
Film and Video Production Tax Credit enhanced		4.5		3.6
Manufacturing Investment Tax Credit enhanced and extended		2.8		2.8
Interactive Digital Media Tax Credit introduced		1.3		2.0
Book Publishing Tax Credit introduced		0.4		0.5
Retail Sales Tax eliminated on selected items		0.5		0.5
		30.9		120.2
Total Changes, 2008 Budget		63.8		181.7
Total Changes Including Ongoing Tax Reductions		166.8		291.5

1	Ongoing tax reductions are those that were announced in previous budgets to take effect in 2008. These are: (a) the increase in the Basic Personal, Spousal and Eligible Dependent Amounts; (b) the reduction in the middle bracket rate and the increase in the top bracket threshold; (c) the introduction of the Family Tax Benefit; (d) the decrease in both corporation income tax rates; (e) the increase in the refundable portion of the Manufacturing Investment Tax Credit; (f) the reduction in the Corporation Capital Tax rates; (g) the increase in the threshold for the Health and Post-Secondary Education Tax Levy; (h) the introduction of the Community Enterprise Investment Tax Credit; and (i) the increase in the Farmland School Tax Rebate.
2	Expenditure increase
3	The value of the tax savings to Manitobans due to Tax-Free Savings Accounts is likely to rise steadily over time. The full-year value shown is an estimate for 2010/11.
4	Parallels 2008 federal budget change, pursuant to the Tax Collection Agreement.

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n PERSONAL TAX MEASURES

EDUCATION PROPERTY TAX CREDIT BASIC AMOUNT

(2008/09 expenditure impact: $24.5 million)

The basic amount of this credit is increased from $525 to $600. Homeowners will have this amount subtracted from their 2008 property tax bills, with the Province reimbursing school divisions and municipal governments accordingly. Renters will receive the increased amount when they file their 2008 income tax return. The basic Education Property Tax Credit is not income tested and is especially beneficial to low-income households who do not pay income tax.

This measure saves homeowners and renters $24.5 million on a full-year basis.

For more information, contact Location B, page C12.

PERSONAL INCOME TAX

Rate and Bracket Changes

(2008/09 revenue impact: $-3.7 million)

Budget 2007 set out a five-year plan of personal income tax bracket and rate changes. The changes for 2009 are now confirmed. Starting January 1, 2009, the first bracket rate is reduced from 10.9% to 10.8%; the middle bracket threshold is raised from $30,544 to $31,000; and the top bracket threshold is raised from $66,000 to $67,000. These measures save Manitoba taxpayers $14.8 million on a full-year basis.

The five-year plan, when complete, is projected to save Manitoba income tax payers $77 million annually; all taxpayers will benefit. As budgetary circumstances permit, additional rate and threshold changes will be introduced to give middle-income earners an overall saving of 10% compared to 2007.

Tax Year	2007			2008			2009			2010			2011
First Bracket Rate		10.90	%		10.90	%		10.80	%		10.70	%		10.50	%
Middle Bracket Threshold	$	30,544		$	30,544		$	31,000		$	32,000		$	35,000
Middle Bracket Rate		13.00	%		12.75	%		12.75	%		12.75	%		12.75	%
Top Bracket Threshold	$	65,000		$	66,000		$	67,000		$	68,000		$	70,000

Note: all changes planned after 2009 are subject to budget balancing requirements.

For more information, contact Location B, page C12.

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Basic Personal, Spousal, and Eligible Dependent Amounts

(2008/09 revenue impact: $-1.8 million)

The Basic Personal Amount (BPA), the Spousal Amount, and the Eligible Dependent Amount are each increased by $100 to $8,134, effective January 1, 2009. This is the seventh increase in the BPA since 1999.

A taxpayer can claim a non-refundable tax credit for a dependent spouse, or if the taxpayer is a single parent, for one dependent child under 18. The maximum Spousal Amount and Eligible Dependent Amount are reduced by any income earned by the dependent. Budget 2007 raised the maximum Spousal and Eligible Dependent Amount by 24% from $6,482 to $8,034, reaching the same level as the BPA for the first time.

	1999		2009		Increase		%
Basic Personal Tax Credit	$	560.51	$	878.47	$	317.97		57	%
Spousal Tax Credit	$	471.74	$	878.47	$	406.74		86	%
Eligible Dependent Tax Credit	$	471.74	$	878.47	$	406.74		86	%

This table shows that these three credits have increased well in excess of the 23% Consumer Price Index inflation rate over the period since 1999.

Approximately 2,100 low-income Manitobans are removed from the tax rolls due to the increases in Basic Personal, Spousal, and Eligible Dependent Amounts. Over all, Manitobans save $7.0 million due to this measure on a full-year basis.

For more information, contact Location B, page C12.

Tax-Free Savings Accounts

(2008/09 revenue impact: $-0.2 million)

Provincial tax will not be applied to accumulations and withdrawals from the new Tax-Free Savings Account plans.

The tax-free savings plan allows taxpayers 18 years of age or older to deposit up to $5,000 annually into a special account, commencing in 2009. There is no tax deduction for these contributions, but accumulations and withdrawals from the account will be free of both federal and provincial tax.

Withdrawals from a Tax-Free Savings Account will not be counted as income to reduce other income-tested provincial benefits, including the Personal Tax Credit, the Education Property Tax Credit, the School Tax Credits for Homeowners and Tenants, the Manitoba Shelter Benefit, Pharmacare, child-care subsidies, and others. This latter feature is intended to assist lower-income Manitobans, in particular, to save.

The value of the tax savings due to Tax-Free Savings Accounts is likely to rise steadily over time. The benefit to Manitobans for 2010/11 is estimated at $5.7 million.

For more information, contact Location B, page C12.

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Primary Caregiver Tax Credit

(2008/09 revenue impact: $-1.0 million)

The Primary Caregiver Tax Credit is introduced, commencing in the 2009 tax year, to provide recognition and financial support to individuals who serve as volunteer primary caregivers for more than three continuous months. This program builds upon the Manitoba Home Care Program, and is intended to help care recipients remain independent as long as possible.

The primary caregiver may be a spouse, other relative, neighbour or friend who provides care without remuneration to a Manitoba Home Care client.

The client must be assessed as requiring Care Level 2, 3, or 4 while living at home. Examples include those with a disability (young or old), those receiving palliative care, and others needing care or supervision for periods of more than three months.

After a three-month qualifying period, the refundable credit is $85 per month to a maximum of $1,020 per year to the primary caregiver for each client, claimable when the caregiver files her/his personal income tax return for the year in which the credit is earned.

Only one person may be designated as the client’s primary caregiver at any one time. A caregiver may not earn the credit for more than three clients within a given month.

The benefit to eligible primary caregivers is projected to be $5.4 million on a full-year basis.

For more information, contact Location I, page C12.

Personal Tax Credit

(2008/09 expenditure impact: $0.6 million)

Commencing with the 2009 taxation year, the Personal Tax Credit is increased as illustrated in the following table.

	2008		2009		Percent Increase
Basic Credit	$	190	$	195		2.6	%
Age Credit for Self	$	110	$	113		2.7	%
Basic Credit for Spouse	$	190	$	195		2.6	%
Age Credit for Spouse	$	110	$	113		2.7	%
Disability Credit for Spouse	$	110	$	113		2.7	%
Credit for Eligible Dependent	$	190	$	195		2.6	%
Disability Credit for Self or Dependent	$	110	$	113		2.7	%
Disability Credit for Dependents	$	60	$	62		3.3	%
Credit for Dependent Children	$	25	$	26		4.0	%

To ensure this credit targets those most in need, it is reduced by 1% of household income. Over 65% of the households that benefit from the Personal Tax Credit have incomes under $20,000. The average net credit per household is over $150. Manitobans claim the Personal Tax Credit upon filing their annual income tax return.

This change benefits over 281,000 lower-income households, and Manitobans will save $2.3 million on a full-year basis.

For more information, contact Location B, page C12.

B U D G E T  2 0 0 8  T a x a t i o n  A d j u s t m e n t s  /  C 5

Community Enterprise Development Tax Credit

(2008/09 revenue impact: $-0.2 million)

The Community Enterprise Development Tax Credit was introduced in Budget 2003, and extended in Budget 2005. This Budget extends the credit for another three years, to the end of 2011.

This tax credit encourages Manitobans to invest in community-based enterprise development projects. It is a non-refundable personal income tax credit equal to 30% on a maximum $30,000 investment in equity capital.

As a result of this measure, Manitobans save $0.6 million on a full-year basis.

For more information, contact Location G, page C12.

Northern Residents Deduction

(2008/09 revenue impact: $-0.4 million)

Individuals who live in prescribed areas of northern Canada for at least six consecutive months may claim the Northern Residents Deduction in computing their taxable income. Effective January 1, 2008, the residency deduction is increased from $7.50 to $8.25 per person per day, and from $15 to $16.50 per day for a sole claimant in a household, as announced in the 2008 federal budget. Residents of the more isolated Northern Zone are eligible for the full deduction, while residents of the Intermediate Zone are eligible for a half deduction.

This measure reduces Manitoba revenue and provides northern residents with tax savings of $0.4 million on a full-year basis.

For more information, contact Location B, page C12.

Manitoba Mineral Exploration Tax Credit

(2008/09 revenue impact: $-0.1 million)

Originally introduced in Budget 2002, the Mineral Exploration Tax Credit is a 10% non-refundable personal income tax credit that reduces Manitoba income tax otherwise payable. The credit is earned when a Manitoba taxpayer purchases flow-through shares in a qualifying exploration company to finance Manitoba mineral exploration projects. Combined with the renewed 15% federal exploration tax credit announced recently, this gives an additional incentive to invest in exploring for minerals in Manitoba. In parallel with the extension announced in the 2008 federal budget, the Manitoba credit is extended for one year, to flow-through share agreements entered into before April 1, 2009. Under the look-back rule, exploration expenditures renounced on funds raised on the issuance of flow-through shares in one year can be spent on eligible expenditures until the end of the subsequent year.

The one-year extension of this credit saves Manitobans about $0.4 million on a full-year basis.

For more information, contact Location D, page C12.

RETAIL SALES TAX

Smoking Cessation Products

(2008/09 revenue impact: $-0.4 million)

The Retail Sales Tax exemption for prescription smoking cessation products is broadened to include non-prescription products, effective May 1, 2008.

Manitobans save $0.4 million on a full-year basis due to this measure.

For more information, contact Location C, page C12.

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n BUSINESS TAX MEASURES

CORPORATION INCOME TAX

General Rate

(2008/09 revenue impact: $-3.5 million)

The general rate falls from 14% to 13%, effective July 1, 2008. Budget 2007 announced a general rate reduction to 12%, effective July 1, 2009. This reduction is now confirmed. Manitoba businesses save $28.4 million on a full-year basis due to this measure.

The Province intends to reduce the rate further to 11% at a date to be determined, subject to budget balancing requirements.

For more information, contact Location A, page C12.

Small Business Rate

(2008/09 revenue impact: $-2.8 million)

Budget 2007 announced a Small Business Rate reduction from 2%, already the lowest rate in Canada, to 1% effective January 1, 2009. This reduction is now confirmed. The rate was reduced from 3.0% to 2.0% for 2008. To maintain integration of personal and business taxation for small business owners, the small business dividend tax credit rate (i.e., the rate on other-than-eligible dividends) is correspondingly reduced from 3.15% to 2.5%.

Manitoba small businesses save $9.7 million on a full-year basis as a result of these measures.

For more information, contact Location A, page C12.

Reduction of Corporation Income Tax Rates since 1999

Taxable Income	1999			2008			2009
Up to $200,000		8.0	%1		2.0	%		1.0	%
$200,000 to $400,000		17.0	%		2.0	%		1.0	%
Over $400,000		17.0	%		13.0	%2		12.0	%2

1	Rate reduced from 9.0% July 1, 1999
2	Effective July 1

B U D G E T  2 0 0 8  T a x a t i o n  A d j u s t m e n t s  /  C 7

Capital Cost Allowance Rates for Manufacturers

(2008/09 revenue impact: $-0.7 million)

In 2007, the tax depreciation for manufacturing and processing machinery and equipment was converted from a 30% declining balance capital cost allowance to a 50% straight line capital cost allowance on eligible property acquired after March 18, 2007 and before 2009. Pursuant to changes announced in the federal 2008 budget, the 50% straight line accelerated capital cost allowance is extended by one year. Furthermore, eligible property acquired by a manufacturer in 2010 will be eligible for a 50% declining balance capital cost allowance rate in the first year the property is acquired, a 40% declining balance rate in the next year and the regular 30% declining balance rate in subsequent years. Eligible property acquired by a manufacturer in 2011 will be eligible for a 40% declining balance capital cost allowance rate in the first year the property was acquired and the regular 30% declining balance rate in subsequent years. The 30% declining balance capital cost allowance rate will be restored to eligible property acquired after 2011.

Manufacturers in Manitoba save $8.7 million on a full-year basis due to this measure.

For more information, contact Location A, page C12.

     

Co-op Education and Apprenticeship Tax Credits

(No revenue impact in 2008/09)

The Co-operative Education Tax Credit is expanded and renamed the Co-op Education and Apprenticeship Tax Credits.

A new component is added, called the Journeypersons Hiring Incentive (J-HI) that provides a tax credit to employers of recent graduates of apprenticeship programs.

The terms of J-HI are similar to those of the Co-op Graduates Hiring Incentive (COGHI). An eligible employer may earn a refundable tax credit for each of the first two twelve-month periods of permanent, full-time employment of a journeyperson for work performed in their certified trade primarily in Manitoba.

The credit equals 5% of wages and salaries paid to the journeyperson (net of other government assistance) up to $2,500 per twelve months of employment for each journeyperson. Employment periods must be continuous and consecutive, but each twelve-month period may be interrupted by a seasonal layoff of not more than three months. There is no limit on the number of journeypersons an employer may hire to earn the credit.

Eligible employers may be taxable corporations, not-for-profit agencies, Crown corporations, municipalities, universities, schools, hospitals, or unincorporated entities. In a year in which the tax credit is earned, the employer must be a participant in an apprenticeship program in Manitoba by a) having at least one apprentice registered to the employer who has completed the first year of apprenticeship with the employer, or b) having had an apprentice who completed at least two full years of apprenticeship within the previous five years.

The journeyperson must have received his or her Certificate of Qualification in Manitoba or elsewhere in Canada after April 9, 2008, and must be hired by the employer within 18 months of certification.

The projected full-year benefit to eligible employers is $4.8 million.

For more information, contact Location B, page C12.

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Film and Video Production Tax Credit

(2008/09 revenue impact: $-4.5 million)

Building upon enhancements made to the Manitoba Film and Video Production Tax Credit in previous budgets, the following measures are introduced effective for productions commencing principal photography after 2007:

1.	a new 5% Manitoba Producer bonus is introduced based on eligible salaries where a Manitoba resident receives credit as a Producer on an eligible film;
2.	the Frequent Filming bonus for returning producers, introduced in Budget 2004, is increased from 5% to 10%;
3.	the percentage of eligible salaries paid to non-residents for work performed in Manitoba that is eligible for the film tax credit is increased from 20% to 30% of eligible salaries paid to Manitobans;
4.	the current requirement that non-residents train Manitobans working on an eligible film will be redesigned to emphasize the transfer of skills to Manitoba technical crew members, regardless of the residency of the person who provides the training.

The estimated full-year revenue impact of these measures is $3.6 million.

Since 2000, Manitoba has introduced a 5% Rural and Northern Manitoba incentive, a 5% Frequent Filming Bonus (now increased to 10%), a 5% Manitoba Producer bonus, and has increased the basic film tax credit from 35% to 45%. A film producer can now qualify for a maximum 65% Manitoba film tax credit rate, the highest in Canada.

The Government intends to examine the film tax credit with a view to changes that would better serve the needs of local producers in Manitoba. The review will be undertaken in consultation with representatives from the Manitoba film industry.

For more information, contact Location E, page C12.

Manufacturing Investment Tax Credit

(2008/09 revenue impact: $-2.8 million)

As previously announced, the refundable portion of this credit is increased from 35% to 70%, effective January 1, 2008, superseding the Budget 2007 announcement of a 50% rate for 2008. This credit was made refundable at the 20% level by the 2005 Budget, and at the 35% level by the 2006 Budget.

This credit, scheduled to expire on June 30, 2009, is extended to December 31, 2011.

These measures save manufacturers in Manitoba $2.8 million on a full-year basis.

For more information, contact Location A, page C12.

B U D G E T  2 0 0 8  T a x a t i o n  A d j u s t m e n t s  /  C 9

Interactive Digital Media Tax Credit

(2008/09 revenue impact: $-1.3 million)

A new refundable corporation income tax credit is introduced for companies that develop and produce interactive digital media projects in Manitoba. The tax credit will be equal to 40% of the remuneration paid to Manitobans on eligible projects approved by Manitoba Science, Technology, Energy and Mines. The maximum tax credit on an eligible project is $500,000. Projects that begin prototyping and product development after April 9, 2008 and before 2011 will qualify for the credit.

A qualifying company must be a taxable Canadian corporation with a permanent establishment in Manitoba. The tax credit will be processed as part of a qualifying company’s annual income tax return and administered by the Canada Revenue Agency.

This tax credit replaces the Manitoba New Media Production Grant, which is available for projects developed and produced prior to April 10, 2008. Project eligibility under the tax credit builds upon the criteria under the Grant.

The estimated full-year tax saving to Manitoba companies is $2.0 million.

For more information, contact Location F, page C12.

Book Publishing Tax Credit

(2008/09 revenue impact: $-0.4 million)

To assist the development of the book publishing industry in Manitoba, the Book Publishing Tax Credit is introduced, equal to 40% of eligible Manitoba labour costs. Eligible labour costs include non-refundable author advances; and remuneration for activities carried out in Manitoba, including: salaries for editing, design and project management; fees to freelancers for editing, design, and research; artwork; and development of prototypes. This tax credit is refundable; the maximum credit claimable by a publisher is $100,000 per year.

An eligible publisher must be engaged primarily in the business of publishing books, must have a permanent establishment or be resident in Manitoba, must pay at least 25% of its wages and salaries to employees who are Manitoba residents, and must have recently published at least two qualifying books.

A qualifying book is a new, non-periodical publication that is Canadian-authored and is categorized as fiction, non-fiction, poetry, drama, biography or children’s. A book eligible for a Book Publishing Tax Credit is a qualifying book for which contracts were entered into after April 9, 2008, and which is published before 2012.

Eligible labour costs must be incurred and paid in Manitoba by the publisher after April 9, 2008 and before 2012.

To promote environmental sustainability in this industry, an additional bonus equal to 10% of the Manitoba printing costs can be earned by the publisher if an eligible book is printed on paper with a minimum of 30% recycled content. Eligible printing costs must be incurred and paid within one year of publication of the eligible book.

The full-year benefit of this measure to book publishers is estimated at $0.5 million.

For more information, contact Location J, page C12.

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Community Enterprise Investment Tax Credit

(2008/09 revenue impact: not applicable)

Budget 2007 introduced the Community Enterprise Investment Tax Credit as a complement to the Community Enterprise Development Tax Credit. This non-refundable income tax credit is available to both individual and corporate investors who acquire equity capital in emerging enterprises that require larger amounts of capital than community ownership can provide.

The credit is available on eligible securities acquired after 2007 and before 2011. The minimum investment required by an investor is $20,000 and the maximum annual tax credit that may be claimed by an investor is $45,000. Currently, the maximum annual investment by an investor that qualifies for a tax credit is $150,000. This Budget increases the maximum annual investment limit by an investor to $450,000, retroactive to the commencement of the program, January 1, 2008.

This change increases the maximum amount of the tax credit earned by an investor in a given year ($135,000) but does not affect the maximum amount of the tax credit deductible against Manitoba income tax otherwise payable in a given year ($ 45,000).

For more information, contact Location H, page C12.

CORPORATION CAPITAL TAX

(2008/09 revenue impact: $-14.4 million)

Budget 2007 committed Manitoba to eliminate the general Corporation Capital Tax (CCT), except for Crown corporations, as of December 31, 2010, subject to budget balancing requirements.

For manufacturing and processing corporations, CCT is now eliminated effective July 1, 2008, saving these companies about $25 million a year compared to 2007. Moving up the elimination of CCT for manufacturers will help this sector adjust to the challenges posed by the strong Canadian dollar and overseas competition.

For other corporations subject to the general CCT, elimination as of December 31, 2010 is now confirmed. Rates will be reduced as follows:

n	for corporations with total paid-up capital over $21 million, the rate will be reduced from 0.4% to 0.3% for fiscal years commencing after January 1, 2009, and to 0.2% for fiscal years commencing after January 1, 2010. The tax is eliminated after December 31, 2010.
n	for corporations with total paid-up capital between $10 million and $20 million, the rate will be reduced from 0.2% to 0.1% for fiscal years commencing after January 1, 2009, and to zero for fiscal years commencing after January 1, 2010. (There is a notch provision for total paid-up capital between $20 million and $21 million, which will be adjusted accordingly.)

CCT will be eliminated after December 31, 2010. Corporations with fiscal years straddling this date will prorate the CCT payable for their fiscal year.

Eligible corporations save $59.2 million on a full-year basis due to these measures.

For more information, contact Location C, page C12.

B U D G E T  2 0 0 8  T a x a t i o n  A d j u s t m e n t s  /  C 1 1

RETAIL SALES TAX

Selected Business Items

(2008/09 revenue impact: $-0.5 million)

The following are exempted from Retail Sales Tax, effective May 1, 2008: services to direct agents (items consumed in a manufacturing process), welding tips and nozzles, and rolls used in the pulp and paper industry.

Also effective May 1, 2008, the existing shipping supplies exemption is expanded to include non-returnable stabilizing supplies.

Manitoba businesses save $0.5 million on a full-year basis due to these measures.

For more information, contact Location C, page C12.

n  GREEN MEASURE

EMISSIONS TAX ON COAL

(no revenue impact until 2011/12)

A new tax of $10 per tonne of carbon-dioxide-equivalent emissions will apply to coal effective July 1, 2011. The tax rate will subsequently be raised to $30 per tonne on a schedule to be announced in a future budget. The Province will also contribute up to 25% of private sector capital costs of investments to convert from coal, and will work with coal users to find appropriate substitutes.

For more information, contact Location A, page C12.

n TECHNICAL AND ADMINISTRATIVE MEASURES

n	The Tobacco Tax Act will be amended to require tobacco manufacturers to have a permit for all equipment used in Manitoba to manufacture tobacco products, and to update the marking provisions.For more information, contact Location A, page C12.
n	The capital gains refund provisions under Manitoba income taxation applicable to mutual fund trusts will be made fully available to mutual fund corporations retroactive to 2006.For more information, contact Location A, page C12.
n	The Riparian Tax Credit will be extended to permit another intake group running from 2009 through 2013.For more information, contact Location B, page C12.

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n CONTACTS FOR FURTHER INFORMATION

A:	Federal-Provincial Relations		F:	Knowledge Enterprises Branch
	and Research Division, Manitoba Finance			Manitoba Science, Technology, Energy and Mines
	Telephone:	204-945-3757		Telephone:	204-945-0589
	Facsimile:	204-945-5051		Fax:	204-945-3977
	e-mail	fedprov@gov.mb.ca		e-mail:	newmediainquiries@gov.mb.ca
B:	Manitoba Tax Assistance Office		G:	Economic Development Initiatives
	Manitoba Finance			Manitoba Agriculture, Food and Rural Initiatives
	Telephone:	in Winnipeg 204-948-2115		Toll-free:	1-800-567-7334
	Toll-free:	1-800-782-0771		Web:	www.manitoba.ca/agriculture/ri
	Facsimile:	204-948-2263
	e-mail:	tao@gov.mb.ca
			H:	Manitoba Competitiveness, Training and Trade
				Telephone:	204-945-0141
C:	Taxation Division, Manitoba Finance			Fax:	204-948-1193
	Telephone:	in Winnipeg 204-945-5603
	Toll-free	1-800-782-0318
	Facsimile:	204-945-0896	I:	Manitoba Health and Healthy Living
	e-mail:	mbtax@gov.mb.ca		c/o At Your Service Manitoba
				Toll-free:	1-866-626-4862
D:	Minerals Policy and Business Development Unit
	Mineral Resources Division		J:	Arts Branch
	Manitoba Science, Technology, Energy and Mines			Culture, Heritage and Recreation Programs
	Telephone:	204-945-6564		Manitoba Culture, Heritage, Tourism and Sport
	Fax:	204-945-8427		Telephone:	204-945-3847
	E-mail:	minesinfo@gov.mb.ca		Fax:	204-948-1684
E:	Manitoba Film & Sound Recording
	Development Corporation
	410-93 Lombard Avenue
	Winnipeg, MB R3B 3B1
	Telephone:	204-947-2040
	Fax:	204-956-5261
	e-mail:	explore@mbfilmsound.mb.ca

B U D G E T  2 0 0 8  T a x a t i o n  A d j u s t m e n t s  /  C 1 3

n PERSONAL TAX SAVINGS SINCE 1999

Personal Income Taxes, Education Property Tax Credits, Residential Education Support Levy and Farmland School Tax Rebate

																							Cumulative
																							Annual
	2000		2001		2002		2003		2004		2005		2006		2007		2008		2009		2010		Totals
	(Millions of Dollars)																						(Millions of
																							Dollars)
Income Tax Reductions1
BUDGET
2000		9		68		34																		111
2001				29		7		18																54
2002						15																		15
2003										39														39
2005														30										30
2006														8		34								42
2007																25		51		28		16		120
2008																		1		30		14		45
SUBTOTAL		9		97		56		18		39		0		38		59		52		58		30		455
Property Tax Reductions2
BUDGET
2000		26																						26
2001				27																				27
2002						10																		10
2003								19																19
2004										23														23
2005												37												37
2006														39										39
2007																42		2		2		2		48
2008																		25						25
SUBTOTAL		26		27		10		19		23		37		39		42		27		2		2		255
Annual Totals		35		124		67		37		62		37		77		101		79		60		32		710
Cumulative Annual Totals		35		159		226		262		324		361		438		539		618		678		710

Totals may not add due to rounding.

1	Measures that are subject to budget balancing requirements are not included.
2	Property tax reductions result from increases to the Education Property Tax Credit; implementation of, and subsequent increases in the Farmland School Tax Rebate; and reductions in the Residential Education Support Levy, which was phased out completely in 2006.

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n MANITOBA INCOME TAX SAVINGS FOR TYPICAL TAXPAYERS

							Cumulative
			Tax Savings				Savings		2009 Savings
Income*	Tax in 1999		in 2008		in 2009		over 10 Years		over 1999
(Dollars)							(Dollars)		(Percentage)
SINGLE PERSON1
10,000		178		145		161		1,052		90.4	%
20,000		1,369		221		242		1,777		17.7	%
40,000		4,012		626		665		4,421		16.6	%
70,000		9,153		1,783		1,869		11,541		20.4	%
100,000		14,572		1,983		2,069		13,467		14.2	%
FAMILY OF FOUR — ONE EARNER1
25,000		591		509		543		3,719		91.9	%
40,000		2,891		961		1,010		6,740		34.9	%
60,000		6,625		1,977		2,016		13,419		30.4	%
75,000		9,435		2,309		2,396		15,537		25.4	%
100,000		13,951		2,230		2,319		14,903		16.6	%
FAMILY OF FOUR — TWO EARNERS1
30,000		691		363		399		762		57.7	%
40,000		1,453		413		457		3,273		31.5	%
60,000		4,107		792		846		5,740		20.6	%
80,000		7,169		1,405		1,468		9,083		20.5	%
100,000		10,188		1,891		1,968		11,394		19.3	%
SENIOR COUPLE2
30,000		571		571		587		4,680		102.8	%3
40,000		1,632		562		610		4,550		37.4	%
60,000		4,542		1,022		1,092		7,144		24.0	%
80,000		7,844		1,292		1,369		9,059		17.5	%

1	It is assumed that taxfilers in the single and family examples have earned income and pay Canada Pension Plan and Employment Insurance premiums. In the two-earner family, it is assumed one taxfiler earns 60% of the income and the other earns 40% and pays child-care fees. The Children’s Fitness Tax Credit is also claimed for one child in both family examples.
2	For the senior couple example, it is assumed that both spouses receive private pension income and the Old Age Security Pension. For the years 1999 through 2006, it is assumed that private pension income was split 60/40 by the spouses. The ability to split private pension income was offered beginning with 2007. For 2007, 2008 and 2009, it is assumed that private pension income is split 50/50 where a tax saving would be realized by doing so.
3	The value exceeds 100% due to a refundable tax credit.
*	Income does not reflect Universal Child Care Benefit entitlements but entitlements have been used to determine year-over-year savings.

B U D G E T  2 0 0 8  T a x a t i o n  A d j u s t m e n t s  /  C 1 5

n MANITOBA INCOME TAX SINCE 1999

One-Earner Family of Four at $40,000	Two-Earner Family of Four at $60,000
Source: Manitoba Finance	Source: Manitoba Finance
Single Individual at $70,000	History of Middle Bracket Rate Reductions
Source: Manitoba Finance	Source: Manitoba Finance

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n 2008 INTERPROVINCIAL COMPARISON OF TAX RATES

Shows rate applicable on December 31, 2008. Data as of March 31, 2008

	BC		AB		SK		MB		ON
Personal Income Tax
Top Marginal Rate (%)1		14.70		10.00		15.00		17.40		17.41
Health Care premiums ($)2		1,296		1,056		—		—		0 to 900
Employer payroll Tax (%)3		—		—		—		2.15		1.95
Corporation Income Tax (%)
Small		3.50		3.00		4.50		2.00		5.50
Large		11.00		10.00		12.00		13.00		14.00
Manufacturing		11.00		10.00		10.00		13.00		12.00
Small business threshold ($000)		400		460		500		400		500
Capital Tax (%)4		—		—		—		0.20		0.225
Manufacturers		—		—		—		—		—
Banks		3.00		—		3.25		3.00		0.855
Sales Tax (%)5		7.00		—		5.00		7.00		8.00
Diesel Fuel Tax (¢/l)6		15.00		9.00		15.00		11.50		14.30
Gasoline Tax (¢/l)7		14.50		9.00		15.00		11.50		14.70
Tobacco Tax (¢/cigarette)8		17.90		18.50		18.30		17.50		12.35
Corporation Income Tax Credits
Manufacturing (%)9		—		—		5.00		10.00		—
Research & Development (%)10		10.00		—		15.00		20.00		10.00

1	Top marginal provincial rates include surtaxes paid by taxpayers in the highest bracket. For more detailed interprovincial comparisons of personal income taxes, see The Manitoba Advantage.
2	The premiums for BC and AB are family rates; lower rates apply for individuals. ON calculates premiums based upon taxable income: for incomes of $20,000 or less the premium is zero and the maximum premium of $900 is reached at an income of $200,600. The premiums for the QC Prescription Drug Plan are based on income and are a maximum of $521 for a single person and $1,042 for a family.
3	MB exempts firms with payrolls of less than $1.25 million. ON exempts firms with payrolls of less than $400,000. QC has graduated rates for firms with payrolls of under $5 million. NL exempts firms with payrolls of less than $600,000.
4	MB has a $10 million deduction and a 0.4% rate on taxable paid-up capital in excess of $21 million. QC has a $1 million exemption and graduated rate reductions for the range between $1 million and $4 million. ON has a $12.5 million deduction. NB and NS have a $5 million deduction. MB, ON, QC exempt manufacturers from capital tax.

n FEDERAL AND MANITOBA INCOME TAX RATES, 2008

Personal Income Tax Rates

Federal
Rate	Taxable Income Range
15%	$0 – $37,885
22%	$37,886 – $75,769
26%	$75,770 – $123,184
29%	over $123,184

Manitoba
Rate	Taxable Income Range
10.9%	$0 – $30,544
12.75%	$30,545 – $66,000
17.4%	over $66,000

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	QC		NB		NS		PE		NL
Personal Income Tax
Top Marginal Rate (%)1		19.22		17.95		19.25		18.37		16.50
Health Care premiums ($)2	0 to 1,042			—		—		—		—
Employer payroll Tax (%)3		4.26		—		—		—		2.00
Corporation Income Tax (%)
Small		8.00		5.00		5.00		3.20		5.00
Large		11.40		13.00		16.00		16.00		14.00
Manufacturing		11.40		13.00		16.00		16.00		5.00
Small business threshold ($000)		400		400		400		400		400
Capital Tax (%)4		0.36		0.10		0.20		—		—
Manufacturers		—		0.10		0.20		—		—
Banks		0.98		3.00		4.00		5.00		4.00
Sales Tax (%)5		7.50		8.00		8.00		10.00		8.00
Diesel Fuel Tax (¢/l)6		16.20		16.90		15.40		11.50		16.50
Gasoline Tax (¢/l)7		15.20		10.70		15.50		7.10		16.50
Tobacco Tax (¢/cigarette)8		10.30		11.75		16.52		17.45		18.00
Corporation Income Tax Credits
Manufacturing (%)9		5.00		—		—		10.00		—
Research & Development (%)10		—		15.00		15.00		—		15.00

5	Retail Sales Tax refers to general rate only. QC and PE apply the sales tax on top of GST-inclusive prices. Sales taxes in NB, NS and NL are harmonized with the federal Goods and Services Tax.
6	Vancouver and Victoria levy an additional 6 cents and 2.5 cents per litre, respectively. Effective July 1, 2008, BC additionally imposes a carbon tax of 2.8 cents per litre of diesel fuel. QC applies QST and NB, NS and NL apply HST. PE’s diesel fuel rate is set on a monthly basis and has a flat and variable component, to a maximum of 20.2 cents per litre.
7	Vancouver, Victoria and Montréal levy an additional 6 cents, 2.5 cents and 1.5 cents per litre, respectively. Effective July 1, 2008, BC additionally imposes a carbon tax of 2.4 cents per litre of gasoline. QC applies QST and NB, NS and NL apply HST. PE’s gas tax rate is set on a monthly basis and has a flat and variable component, to a maximum of 15.8 cents per litre.
8	SK, MB, NB, NS and NL apply sales tax to all tobacco products.
9	SK’s credit is fully refundable. 70% of MB’s credit is refundable. QC’s credit is fully refundable if under $250 million of taxable capital. PE’s credit is non-refundable.
10	BC’s credit is refundable for Canadian-controlled Private Corporations for expenditures up to $2 million. SK and MB is non-refundable. ON, NB, NS, and NL’s credit is refundable.

Corporation Income Tax Rates

	Federal			Manitoba
Basic Rate		19.5	%*		13.0	%**
Small Business Rate		11.0	%		2.0	%
Small Business Threshold	$	400,000		$	400,000

*	After provincial abatement and general rate reduction
**	Effective July 1, 2008

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n APPENDIX: MANITOBA TAX EXPENDITURES 2007/08

Introduction

Governments use the tax system to pursue social, cultural and economic objectives in two ways: by direct spending of the revenue raised, and by providing targeted tax preferences to promote specific types of activity or behaviour. The targeted tax preferences can be thought of as tax expenditures since they have much the same effect as direct government spending. For example, direct grants for small businesses, and tax credits for people who invest in small businesses, could have quite similar costs and results. A tax expenditure is measured as a deviation from a benchmark tax base. The expenditure can be in the form of a deduction, credit, preferential rate, deferral, or exemption. Tax expenditures may target taxpayers (ex: individuals, corporations); activities (ex: farming, film production, manufacturing); property (ex: machinery, equipment); sources of income (ex: pensions); transactions (ex: RRSP contributions); or events (ex: involuntary dispositions).

Accounting for Tax Expenditures

Tax expenditure accounts promote accountability and transparency in government programming. Direct expenditure programs are subject to review and approval by the Legislature and are published annually in the public accounts. Tax expenditures, on the other hand, are not recorded as individual line items but are absorbed into revenue estimates. Tax expenditures reduce government revenues that would otherwise have been available for various direct expenditures. Therefore, tax expenditure accounts not only help to enhance the visibility of programs, but promote public accountability as well. Departments routinely estimate and evaluate the cost of various tax incentives as part of the annual budget process. It is generally understood that tax expenditure accounting in no way evaluates tax policy, nor does it address the desirability of the tax provisions, or their usefulness in achieving tax policy objectives. Tax expenditure accounts should not be associated with identifying tax loopholes or areas where reform is needed.

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Limitations of Tax Expenditure Accounting

Tax expenditure accounting has important limitations that must be kept in mind when interpreting results. There are no formal accounting guidelines for tax expenditures. The value of each tax expenditure is estimated individually. Interactions between provisions are not taken into account. This has two effects. First, estimates for two or more tax expenditures cannot be added together to arrive at a combined value. Second, changing any one tax expenditure might affect the value of other tax expenditures. The values in the account are estimates. Point 2 can best be illustrated by example. Changing something that is a deduction from income (ex: RRSP contributions) would change reported net income. This in turn would change the value of tax credits, such as Manitoba’s Personal Tax Credit, that depend on net income. The combined value of the tax expenditures listed in the account is substantially less than the sum of the individual items.

Reporting Tax Expenditures

Manitoba’s tax expenditure accounts are separated into six sections: personal income tax, corporation income tax, payroll tax, retail sales tax, fuel taxes, and corporation capital tax. The estimates are calculated from tax collection and departmental data. The estimates provided are for the 2007/08 fiscal year. They do not include measures announced in the 2008 Budget, or measures announced in previous budgets for implementation after 2007. Certain Manitoba personal income tax credits have the characteristics of tax expenditures but are, in fact, accounted for in Manitoba’s Estimates of Expenditure. Examples include the Education Property Tax Credit and the Personal Tax Credit. These credits are not included in the tax expenditure table. For the sake of comparison, these credits are listed below.

CREDITS ACCOUNTED FOR AS EXPENDITURE ITEMS

	2007/08
	(millions of dollars)
Education Property Tax Credit (including the Advance)		222.9
Personal Tax Credit		46.3
Farmland School Tax Rebate		28.8
School Tax Credit for Homeowners		2.3
Political Contribution Tax Credit (for individuals only)		0.9
Community Enterprise Development Tax Credit		0.6
Community Enterprise Investment Tax Credit		1.3
Riparian Tax Credit		0.1
TOTAL		303.2

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MANITOBA TAX EXPENDITURES, 2007/08

	(Millions of Dollars)
PERSONAL INCOME TAX
(a) Adjustments to Income (in accordance with tax collection agreements)
Contributions to RRSPs		131.6
Contributions to RPPs		69.8
Capital gains inclusion rate		73.7
Lifetime capital gains exemption		22.5
Social assistance, WCB, and OAS/GIS (non-taxable income)		18.9
Union dues and professional fees		14.8
Child-care expenses		10.9
Northern Residents Deduction		5.7
Pension Income Splitting		8.5
Moving expenses		1.6
Scholarship and bursary income exemption		1.8
Tradespeople’s tool expense		0.4
(b) Non-refundable tax credits (basic credits provided federally and by all provinces)
Basic personal		570.7
CPP/EI		100.2
Charitable donations		69.6
Age		29.6
Tuition fees and education amount ($400/month)		25.6
Medical expenses		23.6
Spousal		21.7
Eligible dependent		14.1
Private pension		11.7
Disability		11.7
Caregiver		1.6
Student loan interest		0.9
Infirm dependents		0.1
(c) Other Manitoba Tax Measures
Tuition Fee Income Tax Rebate		11.5
Children’s Fitness Tax Credit		3.0
Adoption Expenses Tax Credit		0.1
Foreign Tax Credit		2.8
Labour-sponsored Venture Capital Corporations Tax Credit		1.2
Mineral Exploration Tax Credit		1.3
Overseas Employment Tax Credit		0.5
Manitoba Equity Tax Credit		0.0

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	(Millions of Dollars)
CORPORATION INCOME TAX
Low rate for small business		137.0
Manufacturing Investment Tax Credit		26.3
Research and Development Tax Credit		20.1
Film and Video Production Tax Credit		18.1
Odour Control Tax Credit		0.1
Co-operative Education Tax Credit		0.2
Green Energy Equipment Tax Credit		0.3
PAYROLL TAX
$1.25 million exemption		124.3
Exemption for interjurisdictional common carriers		12.5
RETAIL SALES TAX
Exemptions and Refund Programs
Groceries		189.4
Farm machinery and repairs		40.5
Farm and organic fertilizer		20.7
Prescription drugs and medicine		19.0
Farm pesticides and herbicides		15.7
Books, free magazines and newspapers, and school yearbooks		16.4
Medical supplies, appliances and equipment		12.5
Electricity used for manufacturing or mining		11.7
Natural gas for residential heating		11.2
Water supplied by a municipality		10.7
Children’s clothing and footwear		9.9
Custom software and computer programming		6.4
Vehicle trade-ins		6.2
Toll-free calls		5.1
Electricity for residential heating		4.6
Vehicle private buy/sell refunds		3.4
Direct Agents — manufacturing and service industries, and drill bits and explosives used in mining industry		2.4
Municipal exemptions (including the purchase of ambulances, fire trucks and related equipment, and gravel or sand purchased by a municipality for its own use)		1.4
Qualifying geophysical survey and explorations equipment, drill rigs and well-servicing equipment used in oil and gas exploration and development		1.3
Feminine hygiene products		1.0
Mobile, ready-to-move and modular homes (point of sale reduction)		0.8
Films for public broadcast		0.4
Farm manure slurry tanks and lagoon liners		0.3
Qualifying geophysical survey and exploration equipment and prototype mining equipment		0.1

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	(Millions of Dollars)
FUEL TAX
Marked gasoline and diesel		41.8
Biodiesel exemption		0.1
Gasohol taxed at lower rate		1.2
Ethanol grant		3.0
CORPORATION CAPITAL TAX
Capital deduction		32.3
Credit unions and caisses populaires exemption		15.0
Co-operatives exemption		0.7

All estimates are based on the most complete information available at the time of publication.

In some cases new information may significantly revise earlier estimates

Source: Manitoba Finance Estimates, March 31, 2008