A pledge by Manitoba's Progressive Conservative caucus to effectively freeze pay for its members means MLAs will receive charitable donation tax receipts, CBC News has learned.

The Tory caucus decided earlier this year its MLAs would write cheques to the Government of Manitoba returning a mandated 1.6 per cent pay increase. The plan to issue tax receipts for those donations will allow MLAs to avoid paying taxes on the increases returned to the province.

The bump in pay was determined by an independent salaries commissioner.

A total of more than $70,000 will be given back to the government by PC MLAs for this coming fiscal year, the party said.

In March, the PC caucus announced all 39 of its MLAs would hand back their salary increases to show support for austerity measures introduced by the Tory government. "We know that we can make a difference only if we lead by example," Premier Brian Pallister said at the time.

What was not announced at that point was how the process would work.

'It is abhorrent to claim a charitable receipt,' for pay increases donated back to the province, now-independent MLA Steven Fletcher said in an April 3 letter to Finance Minister Cameron Friesen. (CBC News ) CBC News obtained a letter written by former PC caucus member Steven Fletcher before he was booted from the Tory team in June . In it, the outspoken MLA for Assiniboia blasted his then-team members for what he called " a scheme" that dominated several caucus meetings.

"We cannot talk about anything else, but when it comes to our salaries there is no end to the questions," Fletcher wrote to Finance Minister Cameron Friesen on April 3.

"Shockingly there is then a scheme developed to minimize the cost to each MLA using charitable tax receipts," the letter reads.

"It is abhorrent to claim a charitable receipt," for the donated pay increases, Fletcher said.

"The Province of Manitoba is a qualified donee for purposes of receiving federal and provincial charitable donations under section 149.1 of the Income Tax Act (Canada)," a statement from Manitoba Finance to CBC News said.

"A Manitoba charitable donation tax credit receipt is issued for the amounts donated by an MLA to the province for a tax year, such as those associated with COLA [cost-of-living adjustments]. The tax credit can then be claimed on the 2017 income tax return. This is consistent with how charitable donations by all other taxpayers would be administered."

Won't benefit financially from receipts: PCs

PC caucus spokesperson James Teitsma, the MLA for Radisson, told CBC News the use of charitable receipts was the best way to allow the caucus to keep its promise for a pay freeze.

"We think this is the clearest demonstration of our commitment and that's what we wanted to ensure as a team together, and so we could maximize the benefit back to the taxpayer," Teitsma said.

He said issuing the charitable donation tax receipts for the returned salary will not allow MLAs to benefit financially, beyond covering the tax they would have paid for income they sent back to the province.

PC caucus member James Teitsma says tax receipts for donated pay increases will not benefit MLAs financially, beyond covering the tax they would have paid for income they sent back to the province. (Travis Golby CBC News )

The NDP also froze MLA salaries in 2011, but chose to impose the freeze with a line in budget legislation. The Tories' wage freeze was voluntary, and wasn't imposed on members of other parties.

Teitsma says the Tories didn't want to force MLAs from other parties to take a freeze.

"We wanted to be able to demonstrate clearly to Manitobans that we were prepared to take a leadership position as a caucus and put it out to the other caucuses and members to respond," Teitsma said.

The three Liberal members in the Manitoba Legislature also decided to effectively freeze their salaries by sending their extra pay elsewhere.

"We as a caucus decided to donate our scheduled pay raise to a charity of choice, which we felt could address the critical needs of Manitobans. It was a clear decision during a time of cutbacks by the PC government," the Liberal caucus said in a statement.

Opposition calls pay freeze a 'stunt'

Opposition NDP MLAs also followed the PC caucus' lead, donating their pay increases and taking the charitable tax credit. But the New Democrats say they didn't like the process at all.

"We were concerned about it and we called it a stunt right off the hop," said Fort Garry-Riverview MLA James Allum.

"We called the financial officials in. We asked for different options because this didn't seem correct and we were told quite clearly, [the pay return] is Mr. Pallister's decision, this is what the government was doing and we had to abide by these rules."

NDP MLA James Allum calls the Tory pay freeze plan a 'stunt.' (Travis Golby CBC News ) Allum said Fletcher's letter to the PC caucus about the charitable donation receipts raises more questions.

"Mr. Fletcher says [members of the PC caucus] couldn't ask any other questions except to talk about how they were going to deal with their own wage freeze. That's not fair to the people of Manitoba and we would invite the premier to come clean.… What else have we not heard about?" Allum said.

Fletcher declined to comment on his letter because it was submission in a lawsuit he has brought against the province, challenging a law that forbids him from joining another party's caucus.

Fletcher's lawyer, Bill Gange, says his client's concern is clear in his letter and the idea of issuing tax receipts for donated salary increases was never made clear to the public.

"The letter sets out Steven's horror that anybody would even be considering that," Gange told CBC News. "He specifically said, 'Look guys, I'm not going to ask for, or accept, a charitable receipt.'"

The Canadian Taxpayers Federation has also cried foul about the issuing of the tax receipts.

"This is about leadership more than money," said Todd MacKay, the Prairie director of the organization.

"The reality is we have to trim costs across government. The best way to do that is to just rip the bandage off. If you are going to trim your salary, just do it. Don't fool around.… If you do shenanigans like this you are just complicating it and mixing the message. Just get it done."