Many have called the 2013 Manitoba budget the "taxing budget" because of the one percentage point increase in the provincial sales tax, but it is more appropriate to call it the "inequality and poverty budget" because its main effects are to increase inequality and maintain high levels of poverty. It justifies this by claiming that all Manitobans will benefit; but what it does not say is that affluent Manitobans will benefit the most and poor Manitobans the least. First, it is important to note there is significant income inequality in the Manitoba economy, so doing nothing about it is problematic, and taking action to worsen it is damaging. There is clear evidence economic inequality erodes health and increases social conflict, including crime. Budget The most recent Statistics Canada data are from 2010. In that year, on average, the richest 10 per cent of Manitoba families with children received 9.3 times as much income from all sources ($207,223) as the poorest 10 per cent ($22,309). Put differently, 2.5 per cent of all income received by families with children went to the poorest 10 per cent of families and 24 per cent went to the richest 10 per cent. How does this budget increase inequality? Both by the means through which it raises revenues and through the expenditure choices that it makes. First, on the revenue side, the government could have taken action based on the ability to pay so that those with higher incomes and more capacity to pay would have borne more of the burden. One way to do this would be to add an additional bracket at the top end of the income hierarchy. All Manitobans who earn more than $67,000 pay the same marginal tax rate for income earned over that amount. Why not establish a new bracket for those earning more than $135,000 as the federal government does? This would have acted to decrease economic inequality. But the taxation measure the government took does the opposite. It is unfair in that it treats those in different circumstances as equal. The finance minister characterized the increase to the provincial sales tax as "the fairest way to reach these goals, because the cost will be shared by everyone." But is it fair that the working poor and welfare recipients pay the same consumption-tax rates as Manitoba's millionaires? In fact, since the poor have less money to save or invest and must spend more of their income on daily living, the provincial sales tax increase likely amounts to a higher percentage of their income than for the rich. Read more..