Manitoba's NDP government gambles on a tax increase

By Ben Carr| April 29, 2013Although the weather is erratic in the Manitoba capital these days – it is officially the coldest April on record in Winnipeg -- one thing is inevitable: as the snow melts and the Red River rises, there will be flooding. This is nothing new to Manitobans – it is almost as predictable as the winter that comes before.This year however, Manitobans are in for more than just an increase in water levels – they can expect an increase in their taxes too. The announcement came last week as Finance Minister Stan Struthers unveiled the NDP Government's annual budget. Premier Greg Selinger's government took a bold step, making the decision to raise the Provincial Sales Tax from 7% to 8%. During the 2011 Campaign, the opposition suggested that the NDP were considering raising the PST. Selinger responed by saying that these were “ridiculous ideas that we're going to raise the sales tax. That's total nonsense. Everybody knows that.”The combination of poor weather, severe flood warnings and the unfortunate shortcomings of the Winnipeg Jets have left Manitobans a bit sour. Nobody likes to pay taxes, but the PST increase is like the straw that broke the camel's back. It has sparked a particularly bitter debate among Manitobans across the province.Some have defended the Government's position, arguing that an increase in the PST is necessary to tackle things like Winnipeg's crumbling infrastructure, and protection against the flood. Others have argued that the increase is a cash grab, which they say will be used to top up government accounts that have been drained as a result of fiscal irresponsibility on the part of the New Democrats. Manitoba is currently one of the most heavily taxed provinces in the country.Progressive Conservative Leader Brian Pallister has urged the Government to hold a referendum on the issue; he is not alone in his demands. The Winnipeg Chamber of Commerce is opposed to the tax and has come out in favour of a referendum. Meanwhile, for the past two years, the Business Council of Manitoba has been urging the Government to implement a 1point increase in the PST.The Business Council of Manitoba has recommended the Government spend all of the increased PST revenue on infrastructure – namely roads, water systems and sewage systems. According to the Government, the 1point increase in the tax will raise roughly $277 million per year. The NDP have only committed to spending 40% of the revenue raised from the increase on infrastructure, which for them also includes things such as hospitals and schools.While there are some key differences between them, the Business Council of Manitoba, the Chamber of Commerce, and the Progressive Conservatives are all advocating for a referendum. Encouraging the Government to allow the people to decide on such an important issue is a reasonable argument; it also happens to be the law.In the 1990s, the Progressive Conservatives led by Premier Gary Filmon introduced a balanced budget law. Among other things, the law states that “the government shall not present to the legislative assembly a bill to increase the rate of any tax imposed by an act ... unless the government first puts the question of the advisability of proceeding with such a bill to the voters of Manitoba in a referendum.”In order to avoid a public vote, the NDP will use their majority in the legislature, and are preparing to amend the Act so that it will exclude the referendum provision on matters relating to increases on a tax such as the PST.Raising the PST may well have been necessary in order for the Government to adequately prepare for a spring flood, and to help create jobs by supporting new infrastructure projects. The question Manitobans should be asking, however, is why the government was not preparing more carefully for the future, as it continued to spend more money than it was bringing in, knowing full well that eventually the pot would run dry, with flood bills left to be paid and roads to be built.Meanwhile, the political landscape in Manitoba could be in for an interesting shift, as we approach the 15 year mark since the NDP have held power. Greg Selinger is a competent enough leader, although many criticize him for his lack of vision and characterize his government as “old” and “tired.”The Progressive Conservatives meanwhile are trying to reorganize after two bitter election losses, which saw their leader, Hugh McFadyen, step down and former federal Conservative MP Brian Pallister take the reigns. The jury is still out on Pallister, as Manitobans wait to see what plans he has for the future of the province.The Manitoba Liberal Party has been stuck near 13% in the polls for over 15 years, but that could all be about to change. Leader Jon Gerard has announced that he is stepping down, and the provincial grits are set to elect a new leader this Fall.Although few names have surfaced as of yet, there is some historical precedent for the Liberals to look to as they try to rejuvenate a party that has been left marginalized with a lonely voice in the Legislature for over a decade. In 1988, Sharon Carstairs won 20 seats, dramatically increasing her party's seat count in the legislature, and landing them in Official Opposition.Carstairs was able to make gains during a moment in Manitoba politics that is not too dissimilar from today. Howard Pawley and the NDP had been in power for the better part of the 1980s, and had grown tired. Before the election, the NDP chose Gary Doer as their new leader. The PCs were led by Gary Filmon, who at the time was a likeable, yet relatively unknown leader. Carstairs and the Liberals were able to take advantage of the situation, and rise up the middle, registering most successful outcome in the modern history of the party. Their success in 2015, of course, will greatly depend on who is elected at their convention in October.It's possible that the NDP tax increase comes at a particularly bitter point in time for many Manitobans. But, it's also possible that voters really are fed up with paying more taxes. The provincial election is two and a half years off, but don't be surprised if the PST issue is still being debated as hotly in 2015 as it is now (just as the GST lived on as a political issue for over a decade). Regardless, there is likely to be a lot of hot air swirling around this prairie province for some time to come, let's just hope most of it comes from the weather.Ben Carr is a teacher currently living in Winnipeg. He has been involved with the Liberal Party of Canada in varying capacities for years. In 2006 Ben served as Scott Brison's Campaign Manager for Manitoba during the Liberal Leadership. In 2008, he held the same position for Bob Rae's Leadership bid. Ben has also served as Assistant to the National Director for Election Readiness with the Liberal Party and was the National Campaign Liaison during the 2008 Federal Election. In his youth, Ben served as President of the Young Liberals of Canada (Manitoba) as well as a Parliamentary Assistant to Reg Alcock, former President of the Treasury Board.