SASKATOON, Saskatchewan (Reuters) - The Western Canadian province of Manitoba is projecting a C$48 million budget surplus in 2009-10, bucking a trend that has seen the recession pushing other provinces into deficit.
The agriculture-based province’s budget, presented on Wednesday, includes a C$110 million dip into its fiscal reserve, dropping it to C$634 million, as well as cuts to mining, personal and corporate income taxes.
“Manitoba will not be immune from a global recession but we are determined to take advantage of our economic strengths to sustain our quality of life,” Finance Minister Greg Selinger said in his budget address.
The mining tax rate drops to 10, 15 or 17 percent from 18 percent, depending on taxable income levels. The general corporate income tax rate drops to 12 percent from 13 percent.
Manitoba plans to eliminate its small business tax by 2010.
The province plans to spend C$12.68 billion, up 1.8 percent from forecast spending for the current fiscal year and take in C$12.729 billion in revenue, a drop of about 0.4 percent.
In response to the credit crunch, the provincial government is tripling the value of loans available in a program to help businesses expand.
It will spend C$1.6 billion on infrastructure, an increase of C$625 million, to stimulate the economy.
Premier Gary Doer’s left-leaning New Democratic Party has been in government for 10 years and balanced every budget.
The government is budgeting a C$20 million debt payment to cut the province’s overall debt, which stands at about C$15 billion.
The government expects to finish the current 2008-09 year with a C$316 million surplus.
Manitoba government bonds were little changed following the release of the budget. The yield on the 10-year benchmark was 129.3 basis points above the Canadian government yield curve.
The Conference Board of Canada expects Manitoba to lead all provinces except neighboring Saskatchewan in economic growth this year.
Manitoba’s economy is less reliant on commodity prices, such as oil or metals, than some provinces and it should get support from its farm economy, hydro-electric projects, as well as aerospace and bus manufacturing industries, the board has said.
Reporting by Rod Nickel; editing by Rob Wilson