Manitoba is in line for another sizeable increase in equalization payments from the federal government in 2025. The following article was published by Mr. Tom Brodbeck on Dec 31, 2024. This article is very interesting as it relates to Nova Scotia and equalization fairness. Manitoba is like Nova Scotia that has regions with excessive taxation on property and they receive an equalization payment greater than the one Nova Scotia receives. This article shocks us, and we better understand why our MPs and MP Candidates won’t talk about equalization. They have the power to change it in Ottawa with the Federal Government. When the government transfers equalization illegally, without conditions, and then when provincial governments use it to reduce taxes for the rich, they are violating the constitution. Here is the article and we would like to know what you think. We are particularly interested in this comment: “Although the federal transfer is constitutionally protected, it is a federally funded program that can be altered by Ottawa with the stroke of a pen. It can’t be eliminated, but it can be changed, and Manitoba could see its share of the pie reduced.” Squandering equalization payments has left Manitoba reeling Dec 31, 2024 Manitoba is in line for another sizeable increase in equalization payments from the federal government in 2025. At $337 million, it’s not quite the record boost of $842 million Manitoba received the year before. But it’s still a significant amount. Sadly, much like the past seven years, most of that extra cash has already been frittered away in tax cuts, leaving the province with a ballooning deficit and fewer resources to pay for front-line services. Imagine if that extra cash had been used to lower the deficit and hire more nurses, doctors and other front-line workers, and to increase funding in critical areas such as addictions and mental-health treatment, as well as a badly needed boost to municipal funding? All told, Manitoba is set to receive $4.689 billion in equalization payments from Ottawa in 2025, according to figures released by the federal government last week. That’s up from $4.352 billion in 2024, which represents about 19 per cent of the provincial government’s total revenues in 2024-25. By 2025, Manitoba’s equalization payments will have grown by nearly $1.8 billion since 2022. Most of that — about $1.6 billion — was spent on tax cuts, including income tax and education property tax cuts over the past seven years, largely under the previous Progressive Conservative government, but also by the NDP. Everyone loves a tax cut. But cutting taxes while posting record deficits and struggling to pay for front-line services doesn’t make sense, especially when most of the tax cuts are benefiting higher-income Manitobans, who could have managed without them. The biggest tax cuts occurred under the Tories in 2023 when they raised the basic personal amount to $15,000 from $10,145. That cost government $326 million on an annual basis. While that measure took 47,400 low-income Manitobans off the tax rolls, it benefited higher income Manitobans the most. There were other less expensive and more equitable ways to support low-income Manitobans. The same year, the Tories raised the threshold for the province’s three income tax brackets, including the highest one (17.4 per cent) from $79,625 to $100,000. Between the two measures, someone earning $150,000 got an annual tax cut of $1,399. Government had to borrow money to pay for that tax relief. It could have instead used the generous boost in equalization payments to reduce the annual deficit and increase funding in health care, education, justice and family services. But that’s not all. What if Ottawa changes the equalization formula in the future and Manitoba’s share drops? That’s a real possibility, especially if the Conservative Party of Canada wins the next federal election (and they almost certainly will) under leader Pierre Poilievre. The Conservative leader has said in the past he wants to overhaul equalization, including making transfer payments “fairer” for Alberta, which — along with all other western provinces except Manitoba — do not receive equalization. Should the Conservatives win the 2025 election, they would inherit a deficit from an outgoing Liberal government approaching $50 billion and will grapple with a national debt that has doubled to $1.4 trillion over the past 10 years. Poilievre will be looking for savings. Equalization may be one of them. Although the federal transfer is constitutionally protected, it is a federally funded program that can be altered by Ottawa with the stroke of a pen. It can’t be eliminated, but it can be changed and Manitoba could see its share of the pie reduced. Manitoba receives more federal funding per capita than any other province in Canada west of the Maritimes. We’ve had it good, but how long will it last? Had those increases been used to lower the deficit and fund front-line services without cutting taxes, Manitoba would be in a much better position to weather any changes to the equalization formula. If equalization is reduced under a Poilievre government, Manitoba’s deficit would likely balloon further and there would be even less money available for front-line services. It’s not a great scenario. The status quo isn’t much better. Because of the tax cuts in recent years, Manitoba is now facing a staggering $1.3-billion deficit in 2024-25, according to the province’s second quarter financial report released earlier this month. That’s up $513 million from a projected deficit of $796 million in the 2024 budget. Debt servicing costs are estimated to be $69 million higher than projected in the budget. Meanwhile, economic growth in 2025 is not expected to pull the province’s dire financial situation out of the fire. Solid growth in the economy generates additional tax revenues for governments. But Manitoba’s projected real gross domestic product for 2025 has been downgraded to 1.6 per cent from 1.9 per cent. That’s barely enough for the provincial government to tread water. That’s to say nothing of the financial carnage that would ensue if U.S. president-elect Donald Trump makes good on his threat to impose an across-the-board tariff of 25 per cent on all Canadian goods and services entering the United States. The Manitoba government is facing significant threats to its financial well-being. It would have been much better prepared for any future fiscal onslaughts had it not slashed taxes over the past seven years. Tom Brodbeck Here is the link to Mr. Brodbeck's article: https://www.winnipegfreepress.com/breakingnews/2024/12/31/squandering-equalization-payments-has-left-manitoba-reeling