Op-Ed: Manitoba budget sees one per cent hike in sales tax to 8%

Posted Apr 17, 2013 by Ken Hanly
The New Democratic Manitoba provincial budget raises the provincial sales tax from 7% to 8%. The province also added a "sin" tax of 4 cents a cigarette to tobacco.
Gregory Selinger  MPP
Gregory Selinger, Premier of Manitoba.
Legislative Assembly of Manitoba
On the positive side, at least for labor, there will be an increase in the minimum wage in October from $10.25 to $10.45. Although the increase is not much, it is better than nothing. There will also be an increase of $250 in the personal exemption on provincial income taxes. Seniors are also promised an end to school tax payments by 2015.
In order to raise the sales tax, the province will pass legislation that will enable it to bypass the need for a referendum that is required for any increase in the sales tax. The increase is expected to raise an extra $277.6 million per year. Last year's budget also had a $184 million increase in taxes together with fees.
The premier, Greg Sellinger, said that the sales tax would be used to fund infrastructure development in tandem with federal funds. He claimed that it was the fairest way to raise the extra funds needed:"The PST is the fairest way to reach these goals because the cost will be shared by everyone". However, a sales tax is the same whether the person who purchases an item is at the poverty level or is a billionaire. In fact it is a regressive tax. A fairer way would be to raise the provincial income tax since then a person would pay according to their income. Sellinger crows that the Manitoba sales tax will still be the third lowest in Canada. Another way of stating the same fact would be to say that it is the third highest.
Nova Scotia has the highest sales tax at 10%. Quebec is just under that. Then there are a whole group of provinces now at 8%. Alberta is an outlier with no sales tax, while Saskatchewan has a 5% rate.
the minister said, adding that Manitoba’s sales tax will remain the third-lowest in the country.
Spending will rise by 3.1 per cent compared to last year. Sellinger said: “They needed better roads. They said they needed personal care homes. They said they needed new schools for the young population, and in the Assiniboine Valley they said they needed permanent flood protection. Those are expensive bills. “
Stan Struthers the finance minister said: "Manitoba has weathered the financial crisis better than most provinces. Over the last five years our province’s average annual economic growth rate was second best out of all provinces, and almost double the rate of national economic growth. Forecasters expect us to outperform the national growth rate again in 2013."
To curb expenditures, the government is freezing or reducing the budgets of 11 government departments and a 20 per cent reduction in cabinet ministers' salaries is also extended for another year. The new budget allocates funds to provide 24 hour helicopter ambulance service in Manitoba. $1.8 billion has been allocated to upgrade and renew infrastructure including roads, hospitals, schools, and flood protection.
Many retail businesses were unhappy with both the sales tax hike and the minimum wage increase. Larry McInnes, Prairie Director of the Retail Council of Canada said that raising the sales tax a percentage point was "a huge disappointment for Manitoba retailers and … a huge hit for Manitoba consumers. It’s as bad a new budget as we could have possibly dreamt." Actually, the tax could have been raised another percentage point and still be below that of Quebec and Nova Scotia. McInnes also noted: "“This government was elected on a promise not to raise taxes in 2011. They’ve broken that promise. Not only have they broken that promise, they’ve robbed Manitobans of the ability to make that choice.” While this is quite true, Manitoba New Democrats are probably not unique in breaking election promises or even depriving citizens of democratic choice.