The Manitoba government is reducing taxes for businesses this year and pouring $1.6 billion into infrastructure projects as it fights the economic downturn, but will maintain a balanced budget, Finance Minister Gregory Selinger said on Wednesday.

Despite tax cuts and slew of investments in the province’s 2009 budget, the government projects net income of $48 million in 2009. The Manitoba government expects the province to experience economic growth that outperforms the national average for a fourth consecutive year.

“The sound financial management practiced by Manitobans and Manitoba businesses puts our province in a better position than many to face the current economic upheaval,” said Selinger in delivering the budget.

The budget includes plans to permanently eliminate the small business income tax by December 2010, so that eligible businesses will pay zero tax on income up to $400,000. The change will reduce the province’s revenue by $9.5 million a year.

“Manitoba will have one of the friendliest tax environments for small businesses in North America,” said Selinger.

To help businesses through the current environment, Manitoba also plans to double the funds for the Community Enterprise Investment tax credit to an annual limit of $33 million. The tax credit equal to 30% on a maximum $450,000 investment in equity capital is available to both individual and corporate investors who acquire equity capital in emerging enterprises. It will provide small and medium-sized businesses with $17 million more in investment capital, according to the budget.

Companies will also gain access to capital through a measure that doubles the value of shares a business can apply for under the Community Enterprise Development Tax Credit, from $500,000 to $1 million. The program encourages Manitobans to invest in community-based enterprise development projects with an income tax credit equal to 30% on a maximum $30,000 investment in equity capital.

“We are working to support small businesses and provide easier and faster access to services and credit that will help them grow in these turbulent economic times,” Selinger said.

Manitobans will also realize personal income tax savings this year. The budget includes an increase in the basic Education Property Tax Credit to $650 from $600, and the government plans to further increase this to $700 in the future. As a result, homeowners with sufficient property taxes will have this amount subtracted from their 2009 property tax bills, and renters will receive the increased amount when they file their 2009 income tax return. The change will save taxpayers $16.4 million this year, according to the budget.

“Increases to the Education Property Tax Credit reduce the tax burden for low-income Manitobans, especially women,” Selinger said.

To stimulate the economy, the budget features $1.6 billion in infrastructure projects in such areas as social housing, roads and highways, municipal and wastewater projects and health capital construction.

“We are dedicating investments to create jobs in the near term and building the foundation for prosperity in the future,” Selinger said.

Other investments in the budget include new funding for public schools, universities and colleges, increased skills training for Manitobans affected by the economic downturn, and new investments in the green economy, health care and municipalities.

IE