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December 23, 2008 PROVINCE HELPS PROTECT WORKPLACE PENSION PLANS– – –Small Business Tax Reduced, Minimum Wage Increase Staggered in 2009: Allan Extending the time frame for businesses with workplace pension plans to fund solvency deficiencies, cutting the small business tax and staggering a minimum wage increase will help businesses better manage economic uncertainty next year, Labour and Immigration Minister Nancy Allan announced today.
“We know Manitoba is not immune to the current unpredictability in the global economy so we are proceeding with several initiatives to help businesses manage economic uncertainty heading into the new year,” said Allan.
“This is why we are making changes to the Pension Benefits Act to allow employers to extend the solvency amortization period to 10 years from five, which doubles the amount of time allowed for funding solvency deficiencies.”
The regulation allowing the time frame to be temporarily extended will also enable consolidation of existing solvency payment schedules. Temporary funding relief will be conditional on funding payments being up-to-date and on full disclosure to plan members and plan beneficiaries, with no more than one-third of each group objecting to the extension.
“These changes will help Manitoba business make solvency payments over a longer period of time, bringing an element of stability in a time of economic uncertainty,” said Allan.
In 2009, the small business tax will be cut in half – to one per cent – saving small businesses $10 million and an increase to the minimum wage will be staggered to help temper its impact on Manitoba businesses.
“In 2009, we will continue to have the lowest small business tax rate in Canada,” said Allan. “In the coming year, we are staggering an increase to the minimum wage instead of implementing a single increase. A fair and balanced minimum wage must reflect the realities of today’s business environment which is why we are staggering next year’s wage increase to provide small businesses time to implement the change,” said Allan.
On May 1, 2009, Manitoba’s minimum wage will increase by 25 cents to $8.75 an hour and, on Oct. 1, 2009, the rate will increase by another 25 cents to $9 an hour.
The province has steadily increased the rate from $6 an hour in 1999, restoring the spending power of minimum wage earners that eroded over the 1990s. The latest increase took effect in April 2008 when the rate went up to $8.50 from $8 an hour. Since 1999, the small business tax rate has been cut by 75 per cent and the corporate income tax has been reduced by nearly 30 per cent.
“Ensuring a reasonable minimum wage helps Manitoba remain an affordable place to live, work, raise a family and operate a business,” said Allan.
The minister also committed today to referring future minimum wage increases to the Labour-Management Review Committee which is represented by both labour and management.
There are approximately 28,000 minimum wage earners in Manitoba, many of whom are women and youth. With this increase, Manitoba will maintain its position near the middle of minimum wage rates among Canadian jurisdictions.
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