It's been thirty-three years since the Manitoba Payroll Tax was implemented and the Canadian Federation of Independent Business is calling for change. Manitoba Director Elliot Sims explains "The tax was brought in in 1982 at a time when the provincial government was dealing with many of the problems we have today, significant government deficits driven by unsustainable provincial spending." He adds the tax was brought in under the title of Health and Post Secondary Education Levy however, says there are no accountability methods in place for the provincial government to follow. "All revenues from the Payroll Tax simply goes into the General Revenue fund of government and is used to pay for projects at the whim of the provincial cabinet."

This levy requires medium-sized businesses in Manitoba to pay a tax of up to 4.3 per cent on their payroll costs if their annual payroll exceeds $1.25 million. Sims says this a move that is "Stealthily being imposed on smaller and smaller businesses at time goes by because of the policies of the provincial government."

Sims explains the CFIB is calling on the province to raise that exemption level from $1.25 million to $1.5 million. The organization also wants to see the province start indexing the value for inflation. "So even if businesses don't add staff, if they simply do small annual cost of living increases, eventually they'll get bumped over this threshold essentially accidentally and have this massive tax placed on their payrolls." He goes on to say the government needs to make up for lost ground since 2008, which is the last time the exemption level was raised. "To ensure that these small businesses that are trying to provide good wage growth to their employees aren't penalized by having to pay an extra tax." Sims adds the CFIB has had numerous phone calls from members over the last six months describing the impact this tax has had on their business.

Overall, Sims says this tax is just another indication of the "Backwards tax environment that Manitoba has for small businesses." He goes on to say that Manitoba is one of only four provinces in Canada to have a payroll tax, and notes Manitoba's tax rate comes at the highest marginal rate when small businesses surpass the $1.25 million exemption. "It's just putting us further and further behind the eight ball when it comes to providing and tax competitive environment for small businesses to flourish."