Manitoba business owner ditches expansion plans due to taxes

Some Manitoba business owners say theyve put the brakes on expanding in the province and theyre blaming high taxes.

George Andrews, owner of G.J. Andrews Food & Wine Shoppe, said payroll taxes and the PST expansion in 2012 and increase in 2013 are the biggest offenders.

Andrews said when most Manitobans think about the one-percentage-point increase in 2013, they forget the provincial sales tax was expanded the year prior to include services previously exempt.

We now add the PST on to every accounting bill, plumbing bill, my refrigeration guys, every legal bill that you have, my insurance. I pay over $900 in PST on business insurance. We never paid that before, so all of this really adds up, he said.

According to the Canadian Federation of Independent Business (CFIB), when Manitoba businesses reach payroll levelsbetween $1.25 million and $2.5 million they are taxed at a rate of 4.3 per cent on the amount in excess of $1.25 million.

With 14 employees, Andrewssaid his business is below the threshold. The 61-year-old small-business owner said the tax prevented him from expanding.

"I've been asked over and over again by customers and developers to do different businesses; I won't do it, the tax burden that falls on us is just so big, it just discourages me from going any further," he said.

Chuck Davidson, president and CEO ofManitoba Chambers of Commerce said payroll taxes make Manitoba less competitive because it penalizes businessesas they get more employees.

It's a tax on growth in Manitoba which makes absolutely no sense and is a real challenge for businesses as they want to grow, said Davidson.

Davidson said the Chamber has been lobbying the provincial government to cut the tax over time.

It's not about cutting it all in one fellswoop, he said. Do it over a five-to-10-year time frame, but at least send the message to the business community we recognize that this is a challenge.

NDP leadership candidates silent on taxes

CBC News approached the three NDP leadership candidates about what they would do with payroll taxes. None of them responded.

The Progressive Conservatives said the payroll tax is a huge burden for businesses and said if it was in power the party would conduct a forensic audit to decide if it could eliminate the tax.

Meanwhile, the Manitoba Liberal Party said if it was in power, it would repeal the payrolltax.

"The Conservatives failed to remove the payroll tax when they were in government. Their claim to support Manitoba business now rings hollow in light of their failure to act," Liberal leader Rana Bokhari stated in a news release.

"The NDP has had 16 years to repeal the tax, but have instead only added to the burden on Manitoba businesses."

It hurts, its quite a pinch, Rob Read, owner of Bison Fire Protection, said about the taxes hes forced to pay on the Winnipeg branch of his company.

Since 2001, Read and a partner built the company in Manitoba, but in 2008 they started expanding outside the provincial boundaries.

Now they have employees in Saskatchewan and Ontario.The fourth generation Manitoban said he will never move his business outside Manitoba entirely, but if his heart wasnt in Winnipeg, hed relocate.

Right now, Id have to look at Saskatchewan, he said. The business climate is really acceptable to business.

With 70 employees, Reads company is above the $1.25 million threshold. In 2013, he said his company paid more than $70,000 due to the tax.

"Think of that as two full time staff members. Think of it as a piece of equipment to speed up process in the back. You could do a lot of things with that kind of money and grow your business, he said.

Manitoba performing well despite payroll tax

By some indicators, Manitoba is applauded as the most friendly to business in the country.

In 2010, Manitoba became the first province in Canada to cut small business tax rates to zero per cent.

According to the Conference Board of Canadas latest report, Manitoba's real gross domestic product is forecast to increase by 2.9 per cent in 2015. In 2016, the economy is expected to grow by a nation-leading 3 per cent.